Possibility to subject leasing to VAT from 1 October 2018

Minister Van Overtveldt's Cabinet has announced that the VAT rules with regard to the leasing of immovable property will be changed from 1 October 2018. Agreement on this is said to have been reached within government over the weekend, in the context of budgetary control. This proposal was already on the table for the summer agreement, but did not make the final cut.

These new regulations can only be applauded and will come as a welcome surprise for the real estate sector. In order to clear away the competition handicap with our neighbouring countries, encourage investment and further simplify VAT regulations, it was decided to introduce an optional VAT levy for the leasing of buildings or parts of buildings to professionals.

The option will need to be exercised by both the landlord and the tenant who is subject to VAT. The new rules will only apply for new-build projects, including substantially renovated buildings. If this system is chosen, an adjustment period of 25 years will apply.

Provision will also be made for a mandatory VAT levy on short-term property leasing, except for leasing of residential property or immovable property whose use is destined for socio-cultural activities.

We continue to await the final texts and any further elaborations on it. We are not currently aware of any further details, but our VAT Team will naturally be following this very closely. For further questions and assistance, please contact us via the details below.

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