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Application of VAT on rent of commercial real estate in Belgium

August 28, 2018

Following the submission of a new draft bill on 31st of July 2018 to the Belgian Parliament, the rules concerning the application of VAT on rent of commercial real estate in Belgium will soon be modified. Once approved by the Chamber of Representatives, the bill should come into force as from 1st of October 2018.  

 

The new regime

 

In a nutshell, a lessor and a tenant will have the possibility to apply VAT on renting of new commercial real estate from 1st of January 2019 onwards.

 

The aim of this new system is to promote the sectors of logistics, building and renovation in Belgium, who are currently at a disadvantage compared to the situation in the neighboring countries, where VAT is applicable (and deductible) on professional real estate renting.

 

Field of application

 

The new ruling will only be applicable on the renting of new or renovated constructions. As a matter of fact, it will apply to the buildings built as from 1st October 2018 and for which no VAT is due on the costs directly in link with those buildings.

 

The new system will only be applicable for the renting to professional tenants, in the context of their professional activities giving them the status of subject to the VAT. The new rules are not applicable for the renting taking place under the private context.

 

Optional system, with one exception

 

For the new regime to be applicable, both the lessor and the tenant will have to explicitly opt for that system. The specificities of that opt in still need to be elaborated on in a complementary act.

 

On the other hand, the renting of real estate to professionals for a period of maximum 6 months will automatically fall under the VAT regime.

 

Final remarks

 

Even though there might be a few changes to the current version of bill by the Belgian Parliament, it is already important for the economic actors to be aware of that future change in the law.

 

At Vanbelle we have a team of experts who will be happy to help to assist with any arising queries on the discussed topic.

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