New VAT measures in the Belgian federal government agreement

Albeit detailed (draft) legislation still needs to be prepared, the federal government agreement published last month already outlines several planned VAT modifications: 

• Simplification or abolition of various vat registers and other reporting obligations, in combination with the introduction of "near real-time reporting" to the tax authorities as from 2028.
• Introduction of a modern VAT penalty policy: a revised system of proportional penalties will aim to better take into account mitigating circumstances (e.g. no financial loss for the Belgian Treasury).
• Reintroduction of the 6% VAT rate for the supply of dwellings by developers: whereas it had recently been abolished (see our VAT alert of January), the reduced VAT rate will be reintroduced for developers supplying dwellings to qualifying individuals after demolition and reconstruction. The maximum surface area of dwellings able to qualify for the reduced rate will however be lowered from 200 m² to 175 m².
• Definition of “renovation” and “renewal construction”: these concepts will be anchored in the law in an effort to increase legal certainty.
• Investments in green energy will be incentivized by applying the following lowered or re-increased rates (as applicable):
  • 6% VAT on heat pumps for the next five years;
  • 21% VAT for the installation of fossil fuel boilers (for dwellings over ten years old).
  • 21% VAT rate on coal.

Key takeaway

Real estate developers should ensure they remain abreast of the various reduced VAT rates and applicable conditions, in order to avoid both the risk of competitive disadvantage and the risk of fines.

All taxpayers will need to adapt to the planned introduction of near real-time reporting in 2028 (following the introduction of e-invoicing in 2026). It is critical not to lose sight of contracting aspects in this respect, alongside the finance transformation project itself.

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