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From July 1, 2025, Belgium implemented a significant reform to its VAT regime on real estate, expanding the application of the 6% reduced VAT rate to more demolition and reconstruction scenarios under Article 53 of the Program Law.
The move, introduced in a draft bill by the Belgian government, is designed to boost sustainable housing while supporting social and long-term rental objectives.
What’s Changing in the Belgian VAT Landscape?
The 6% VAT rate is available only in limited contexts (e.g., urban renewal zones). Under the new proposal, this preferential rate would apply nationally to the sale of reconstructed housing, provided one of the following conditions is met:
- Owner-Occupied Sale:
The home is sold to an individual who will use it as their only and primary residence, with a maximum living space of 175 m². The buyer must register domicile at the property. - Social Rental:
The home is sold to a person or legal entity that rents it out for at least 15 years under social rental conditions. No space limit applies here. - Private Long-Term Rental:
The buyer rents the property for a minimum of 15 years to a tenant who will immediately establish domicile there. The 175 m² limit applies again.
Legal and Fiscal Implications
This reform has two goals:
- Broaden access to the 6% VAT regime beyond urban centers
- Encourage long-term housing stability and energy-efficient reconstruction
It also redefines key eligibility concepts, such as:
- “Unique residence”: A clearer definition will determine if a buyer owns no other qualifying property
- “Possession empêchante”: Rules will clarify how joint ownership or co-investment affects eligibility
Why This Matters to Tax Advisors and Developers
This VAT reform introduces new opportunities and compliance challenges for developers, real estate funds, and private individuals. Here’s what to watch:
- Real estate funds and REITs may qualify for reduced VAT if committed to long-term rental models
- Foreign investors must analyze if joint acquisitions meet the updated “unique use” condition
- Developers selling turnkey homes now have a stronger incentive to rebuild rather than renovate
This national expansion of the 6% VAT could catalyze activity in Belgium’s mid-sized cities and rural areas, where such incentives were previously absent.
Effective Date
The proposed regime is slated to take effect on July 1, 2025, pending final approval by the Belgian Parliament.
We recommend real estate and tax sector stakeholders start reviewing their project structures, rental strategies, and client advisory models in preparation for this shift.
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