Amidst a series of reforms in the areas of pensions, the labour market, healthcare and income tax, the Belgian “Summer Agreement” introduced some VAT rate changes, in particular for residential demolition/renovation projects, clean energy and the purchase of art.
As from 1 July 2025, the sale of reconstructed dwellings by real estate investors and developers is clearly eligible for the 6% reduced VAT rate, subject to compliance with surface and use conditions.
The government has consolidated the previous (permanent or temporary) VAT schemes for the demolition and reconstruction of private dwellings. The three favourable VAT schemes for demolition/reconstruction projects of homes (either destined for own use and long-term social or private letting purposes) available to a builder (an individual or a legal person) if certain requirements are met have been reinstated and the application of the 6% VAT rate extended to specific sales transactions.
Henceforward, real estate developers are able to apply the 6% VAT rate on the sale of reconstructed private homes. This applies to sales of houses, flats sold to private individuals who intend to use the property as their sole and permanent private residence (for at least five years) and to investors (an individual or a company) that intend to use the newly acquired property for long-term (15 years) social or private leasing purposes. In these cases, the habitable surface of the home may not exceed 175m² (reduced from 200m²).
An additional series of VAT rate changes reflect the government’s intention to align VAT (rate) incentives with environmental goals. As from 1 July 2025, the 6% reduced VAT rate for the renovation of dwellings older than 10 years and for the demolition and reconstruction of new houses no longer applies to the supply and installation of fossil fuel-based heating systems. The installation of such polluting heating systems as part of the renovation or reconstruction project are now taxed at the standard VAT rate of 21%. In addition, the “historic” 12% VAT rate for coal and derivatives is abolished.
The application of the 21% rate should discourage the use of coal and solid fuels made from coal, lignite and compressed lignite, coke, etc. and conversely, the reduced 6% VAT rate should promote the supply and installation of heat pumps and related components.
To improve Belgium’s competitive position (as a prime location for purchasing art) as compared to other EU member states, the Belgian federal government has decided to apply a universal VAT rate of 6% on the purchase of artwork, collector’s items and antiques. This adjustment was fuelled by the changes to the EU margin schemes on 1 January 2025. (The margin scheme was a special optional method for VAT-registered dealers to account for VAT on eligible works of art, under which the dealer did not pay VAT on the total sales price of a work of art, but rather paid it on the profit margin in order to prevent the double taxation of goods that already had been subject to VAT.) Under the new rules, the margin schemes for works of art, collector’s items and antiques can no longer be used if the goods were originally purchased with a reduced rate of VAT. As a result, Belgian professional art dealers have been increasingly forced to apply the standard VAT rate (21%) on the full sales price.
The government’s intent is for the 6% VAT rate to universally apply to the purchase or import of artwork, collector’s items and antiques, regardless whether they are sourced directly from the artist, a gallery or a dealer, as from November-December 2025.
The application of the reduced VAT rate to the construction of private dwellings after demolition and the sale of reconstructed homes by real estate developers are subject to multiple conditions (e.g., surface limitations, use and domicile requirements) and formalities (e.g., joint notification, inclusion in invoices and contracts, availability of supporting documents, such as an urban planning permit). Fulfilling these conditions (which apply to both the initial demolition and the subsequent construction) is often burdensome and fact-specific, with severe penalties for failure to comply with the rules (a potential clawback of 15% VAT, penalties and interest) so affected businesses may wish to seek professional advice.
Pascal Dauw
BDO in Belgium
Reduced 6% VAT Rate for Demolition and Reconstruction
As from 1 July 2025, the sale of reconstructed dwellings by real estate investors and developers is clearly eligible for the 6% reduced VAT rate, subject to compliance with surface and use conditions.The government has consolidated the previous (permanent or temporary) VAT schemes for the demolition and reconstruction of private dwellings. The three favourable VAT schemes for demolition/reconstruction projects of homes (either destined for own use and long-term social or private letting purposes) available to a builder (an individual or a legal person) if certain requirements are met have been reinstated and the application of the 6% VAT rate extended to specific sales transactions.
Henceforward, real estate developers are able to apply the 6% VAT rate on the sale of reconstructed private homes. This applies to sales of houses, flats sold to private individuals who intend to use the property as their sole and permanent private residence (for at least five years) and to investors (an individual or a company) that intend to use the newly acquired property for long-term (15 years) social or private leasing purposes. In these cases, the habitable surface of the home may not exceed 175m² (reduced from 200m²).
VAT Rate Incentives to Stimulate Ecofriendly Heating Systems
An additional series of VAT rate changes reflect the government’s intention to align VAT (rate) incentives with environmental goals. As from 1 July 2025, the 6% reduced VAT rate for the renovation of dwellings older than 10 years and for the demolition and reconstruction of new houses no longer applies to the supply and installation of fossil fuel-based heating systems. The installation of such polluting heating systems as part of the renovation or reconstruction project are now taxed at the standard VAT rate of 21%. In addition, the “historic” 12% VAT rate for coal and derivatives is abolished.The application of the 21% rate should discourage the use of coal and solid fuels made from coal, lignite and compressed lignite, coke, etc. and conversely, the reduced 6% VAT rate should promote the supply and installation of heat pumps and related components.
6% VAT Rate for the Purchase of Artwork
To improve Belgium’s competitive position (as a prime location for purchasing art) as compared to other EU member states, the Belgian federal government has decided to apply a universal VAT rate of 6% on the purchase of artwork, collector’s items and antiques. This adjustment was fuelled by the changes to the EU margin schemes on 1 January 2025. (The margin scheme was a special optional method for VAT-registered dealers to account for VAT on eligible works of art, under which the dealer did not pay VAT on the total sales price of a work of art, but rather paid it on the profit margin in order to prevent the double taxation of goods that already had been subject to VAT.) Under the new rules, the margin schemes for works of art, collector’s items and antiques can no longer be used if the goods were originally purchased with a reduced rate of VAT. As a result, Belgian professional art dealers have been increasingly forced to apply the standard VAT rate (21%) on the full sales price.The government’s intent is for the 6% VAT rate to universally apply to the purchase or import of artwork, collector’s items and antiques, regardless whether they are sourced directly from the artist, a gallery or a dealer, as from November-December 2025.
BDO Insights
The application of the reduced VAT rate to the construction of private dwellings after demolition and the sale of reconstructed homes by real estate developers are subject to multiple conditions (e.g., surface limitations, use and domicile requirements) and formalities (e.g., joint notification, inclusion in invoices and contracts, availability of supporting documents, such as an urban planning permit). Fulfilling these conditions (which apply to both the initial demolition and the subsequent construction) is often burdensome and fact-specific, with severe penalties for failure to comply with the rules (a potential clawback of 15% VAT, penalties and interest) so affected businesses may wish to seek professional advice.Pascal Dauw
BDO in Belgium