Under the current rules the "regular" lease of immovable goods is in principle VAT exempt. As a consequence, the corresponding VAT due on the purchase, erection or renovation of the concerned immovable good is not deductible. This results in an increase of the cost price for the rented immovable good and probably also of the lease price with (the amount of) the non-deductible VAT.
The (fiscal) summer agreement mentioned an optional VAT-system which would allow a lessor to charge VAT for professional lease of immovable goods. Nevertheless, on 25 October 2017 a press release stated that the envisaged reform was abolished due to budgetary reasons.
During the recent budgetary control of 24 March 2018 an extended reform of the VAT rules regarding immovable lease has been approved and announced.
With effect of 1 October 2018 an optional VAT system would be foreseen for the immovable lease of (parts of a) buildings, which are "erected" or "sustainably renewed" and used for business purposes (B2B context) under following conditions:
Also, for short-term lease of immovable goods (both old and new) VAT should be charged obligatory (both B2B as B2C context). An exception is foreseen for immovable goods which are used for housing and for transactions of a social and cultural nature.
Such change would result in an extensive saving for all involved parties – owner, property developer, service provider and end-user – since the VAT due on the erection costs, maintenance costs, (following) renovation costs and several other related costs will be deductible.
The altered VAT treatment should still be approved by the Parliament and the Belgian VAT code should be altered accordingly. Further guidelines regarding the practical implementation are to be awaited as well as any (potential) transitional arrangements. More news is expected in the coming weeks.
