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Tax Insights November 2020 - VAT - 6% on demolition and reconstruction works

The Council of Ministers reached a new agreement on the application of the reduced VAT rate of 6% to the demolition and reconstruction of private dwellings.

In principle, 21% VAT is due on the demolition and reconstruction of private dwellings. An exception to this general rule concerns the demolition and reconstruction of private dwellings located in one of the 32 central cities, whereby the reduced rate of 6% applies.

The Council of Ministers has now extended the application of the reduced 6% rate to the demolition and reconstruction of private dwellings the entire Belgian territory. This new measure is of a temporary nature and will apply from 1 January 2021 until 31 December 2022. 

Between 1 January 2021 and 31 December 2022, demolition and reconstruction works will be subject to 6% VAT, provided the following conditions are met:

  • The demolition is accompanied by reconstruction and they constitute a single operation;
  • After completion of the works, the building will be used exclusively or mainly as a private dwelling for at least 5 years;
  • The total habitable surface of the reconstructed dwelling does not exceed 200 m²;
  • The private dwelling is located in Belgium.

The demolition and reconstruction works of dwellings made available to a social housing agency for 15 years are also temporarily subject to the 6% rate, without any special restriction.

With this new, temporary measure, the Council of Ministers aims to encourage demolition and reconstruction works by contractors in order to meet the needs of contractors who receive less contracts in the context of the corona crisis. It also wants to impose a lower cost on families to demolish and rebuild their private dwellings.

If you would like to receive additional information on this matter, the tax team of RSM Belgium is at your disposal ([email protected]). 

RSM Intertax

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