In a message posted on the Finance Department website the minister indicated that the application of a reduced VAT rate (6%) should enable those affected to reduce the cost of such repairs/restoration work.
1. Renovation
In the case of restoration, the application of the reduced 6 % VAT rate is in certain situations already possible on the basis of the current regulations for private residences that are more than 10 years old. Providing the support structure of the house has not been affected, the work will qualify as renovation work that will benefit from the lower rate.
But remember that if new kitchen appliances are installed, they will still be subject to the 21% rate.
If the house is less than 10 years old, the standard VAT rate (21%) will apply in any case.
2. Reconstruction
Under certain conditions the lower 6 % VAT rate may also apply in the event of the demolition of a building followed by the reconstruction of the house by the client. The exact conditions for the application of this measure differ depending on the location in question. In fact two regulations currently apply, the existing regulation for the 6% rate for demolition and reconstruction in 32 urban areas, which has been in force for many years, and alongside this the temporary extension of the 6% rate for demolition and reconstruction throughout the whole of Belgium.
However, one of the conditions associated with both regulations is that in principle the building in question must be completely demolished by or on behalf of the individual who is rebuilding or arranging to have the house rebuilt. In some cases this condition will not be met.
Bearing in mind the exceptional nature of the severe weather that has affected the country, the Minister of Finance has requested his administration to apply a reasonable tolerance that would enable the application of the reduced 6 % VAT rate for reconstruction work in cases where the residence has not been completely demolished by the client themselves, but has incurred severe and irreparable damage as a result of the floods, resulting in damage to the essential structural elements of the old building.
Please note: this tolerance will only apply providing all other conditions imposed within the framework of the lower rate for demolition and reconstruction have been met. Second homes in the Ardennes that need to be reconstructed do not qualify for the 6% (condition: sole residence). Renovation work, however, does qualify for the 6% rate! Any necessary formalities, e.g. the submission of declarations where required, will also still have to be complied with.
Should you have further questions concerning this issue, please do not hesitate to contact our VAT team.
