VAT rate of 6% remains applicable for demolition-reconstruction residential projects for the letting market


In late 2023, the government significantly reduced the ability to apply the reduced VAT rate of 6% to demolition-reconstruction housing projects by limiting the benefit of the reduced rate to projects undertaken by individuals, except when leasing to a social housing agency. This had caused significant concern in the already financially pressured sector. As a result, numerous residential development projects were halted due to lack of profitability.

The Minister of Finance has partially reversed this decision. Specifically, the 6% VAT rate will remain applicable to demolition-reconstruction housing projects that are leased out.

The conditions for this reduced rate remain as they were previously: a maximum surface area of 200 square meters, must be the principal residence, and the property must be leased for at least 15 years to one or more private individuals.

For demolition-reconstruction projects intended for sale, the limitation remains in effect: applicable until the end of 2024 under certain conditions.

This is a welcome measure that will enable the sector to relaunch numerous projects.

Our real estate experts are happy to discuss the impact of this new measure with you.

Dutch article hereFrench article here