Update: It’s a go for the option to apply VAT on ‘new’ immovable letting!

Written by Wouter Villette 26 March 2018


This weekend, the core cabinet of the Belgian Government (finally) reached an agreement on the possibility for landlords to apply VAT on certain immovable lettings.

With a view of raising our country’s and the markets’ competitiveness, the Belgian Government has  for quite some time been juggling (and struggling) with the idea to apply VAT on immovable lettings. This idea c.q. initiative (announced in the Summer Agreement / Tax Reform of 26 July 2017) nearly stranded (in October) on account of budgetary and other reasons … but in the end it did not.

Under the newly expected  rules – which are planned to enter into force on 1 October 2018 – inter alia

  • the possibility to apply VAT on lettings is open to buildings being ‘constructed’ or ‘sufficiently renovated’ (and accompanying land) as of 1 October 2018 (tax point being crucial);
  • landlord and tenant mutually need to agree on the option to apply VAT;
  • VAT adjustment period on eligible properties is extended (from 15 years) to 25 years;
  • short term leases of (old or new) buildings and / or land of maximum [6] months will de iure be subject to VAT in both a B2B and B2C-context ;

The new rules should lead to a far reaching administrative simplification and certain more complex real structures will become redundant.

In terms of VAT, this is without doubt the most important change in the real estate industry in Belgium from both an investor, landlord, broker, service provider and end user perspective. With the new regime, the cost of investing in real estate should decrease significantly as input VAT paid on construction and operating costs will in many cases become recoverable. As a result, this change will impact a.o. deals, pricing, accounting and record keeping requirements, pending investments, servicing and real estate operating models in many sectors across the board.

Proposed legislation still has to pass a.o. parliament approval. More is to come in the next few days and weeks.

Do not hesitate to contact us in case you would like to discuss more in detail the impact of the new measures on your investments.