Demolition and reconstruction at 6% VAT: the new rules

The new rules came into force on 29 July 2025.

With the exception of the new exclusion in relation to central heating systems powered by fossil fuels (see below), demolition and reconstruction work carried out before that date and for which VAT would have become payable from 29 July 2025 will continue to benefit from the reduced rate of 6% if they meet the conditions laid down in the regulations.

The conditions for application to works remain unchanged.

This first scenario specifically targets demolition and reconstruction work commissioned by individuals who use the dwelling for their sole and primary residence.

The project owner may benefit from the 6% reduced VAT rate if the following conditions are met:

• The project owner is a natural person;
• The reconstructed dwelling (house or apartment) has a maximum total habitable surface area of 200 m²;
• The dwelling is assigned as the project owner’s sole and primary residence, and the owner moves in without delay;
  
  These conditions must remain fulfilled until 31 December of the fifth year following the year of first occupation or use;
  
  New rule: this condition is now assessed individually for each project owner of the dwelling. Under the previous temporary regime, if one co-owner did not meet the requirement, the entire project lost eligibility for the 6% rate.
  
  Where applicable, the contractor must proportionally split the price based on each project owner’s dwelling rights.

• A declaration form 111/1 must be submitted (see below);
• Works must be performed no later than 31 December of the year of first occupation.
  
  This means that finishing works on the reconstructed dwelling can also benefit from the 6% VAT rate.

The 6% reduced VAT rate also applies to demolition and reconstruction works commissioned by investors who will dedicate the rebuilt dwelling to social housing rental.

The project owner can benefit from the reduced 6% rate on the works subject to the following conditions: 

• The project owner can be a natural or legal person;
• The reconstructed dwelling (house or apartment) is not subject to habitable surface area limits;
• The dwelling must be assigned to social housing rental;
  
  This means it must be (i) rented directly to a recognised social housing agency or any other licensed public/private entity, or (ii) leased under a management mandate to such an entity.

• The dwelling must remain dedicated to social rental use for 15 years;
  
  This period ends on 31 December of the fifteenth year following first occupation or use (i.e., the date on which the lease or management contract with the social agency takes effect).
  
  All conditions must be met throughout this 15-year period.

• A declaration form 111/2 must be submitted (see below);
• Works must be completed no later than 31 December of the year of first occupation.
  
  Finishing works on the reconstructed dwelling are also eligible for the 6% VAT rate.

The 6% reduced VAT rate also applies to demolition and reconstruction works commissioned by investors who will dedicate the rebuilt dwelling to long-term private residential rental.

• The project owner can benefit from the reduced 6% rate on the works subject to the following conditions: The project owner can be a natural or legal person;
• The reconstructed building (house or apartment) has a maximum total habitable surface area of 200 m²;
• The dwelling is dedicated to long-term rental to natural persons;
  
  The rental must be arranged directly between the investor and the individual who will establish their official residence in the dwelling without delay. The building cannot be used for non-residential purposes (e.g., student housing, holiday rentals).
  
  Because the rental must be directly between the project owner and the tenant, the dwelling cannot be rented to intermediaries or operators who sublet it (e.g., co-living companies).However, if the works are invoiced directly to a co-living operator who leases the units directly to residents (who establish official residence), the 6% reduced VAT rate may apply, provided all other conditions are met.

• The dwelling must remain dedicated to private residential rental for 15 years, and all conditions must be respected throughout this period;
  
  This period ends on 31 December of the 15^th year following the year in which the reconstructed building was first occupied or used.The 15-year duration must be evidenced by the registered lease contract(s) covering this period;

• A declaration form 111/5 must be submitted (see below);
• Works must be completed no later than 31 December of the year of first occupation.
  
  Finishing works on the reconstructed dwelling are also eligible for the 6% VAT rate.

As from 29 July 2025, the 6% reduced VAT rate does not apply to the following services:

• Construction or real estate works not related to the dwelling itself, such as garden landscaping or fencing installation;
• Works relating to pools, saunas, mini-golf courses, tennis courts, or similar facilities;
• Cleaning services (full or partial cleaning of a dwelling);
• Supply and installation of components or parts of a central heating system running on fossil fuels, including burners and control devices connected to the boiler.
  
  
  • The latter exclusion is tolerated by the tax authorities. In its circular 2025/C/47, the tax authorities specify that the reduced VAT rate of 6% may apply to these transactions provided that they are part of a demolition and reconstruction project for which a contract has been concluded by 28 July 2025 at the latest and provided that the VAT is invoiced by 30 June 2026 at the latest.

As specified, the project owner must submit one of the following declarations:

• Form 111/1 – 1 July 2025: reconstruction by an individual for own residence
• Form 111/2 – 1 July 2025: reconstruction for social housing rental
• Form 111/5 – 1 July 2025: reconstruction for private long-term rental

System not yet available:

It is not yet possible to submit these forms via MyMinfin. The tax administration expects to make the electronic forms available starting October 2025.

Until 31 December 2025, service providers can apply the 6% reduced VAT rate if both of the following statements are included on the invoice: 

• “Application of the 6% VAT rate for the demolition and reconstruction of a dwelling (Section XXXVII, §1, 2, or 4*, of Table A annexed to Royal Decree of 20 July 1970 establishing VAT rates – permanent measure effective from 1 July 2025).”
• “The declaration referred to in Section XXXVII, §1, 2 or 4* above must be submitted via MyMinfin as soon as the declaration becomes available.”
  
  * to be specified according to the use intended for the building by the project owner

• • 1 → Reconstruction by an individual for own residence
  • 2 → Reconstruction for social housing rental
  • 4 → Reconstruction for private long-term rental

(NOTE: this is a free translation. For the exact FR / NL version that must appear on the invoice, refer to point 4.4 of the Circular 2025/C/48 in FR or NL).

Once these forms are available, the project owner must take the necessary steps to submit the missing declarations relating to the transactions for which they have applied this tolerance as soon as possible and in any case no later than 31 January 2026 via MyMinfin.

A copy of this declaration (a copy of the acknowledgement of receipt from the SPF Finances, proof of submission of the declaration, is sufficient) must then be sent by the client to the service provider(s) as soon as the declaration has been submitted via MyMinfin.

What about work in progress before 29 July 2025?

For demolition and reconstruction work that was already subject to the reduced VAT rate of 6% under the previous regulations, the client has already had to submit a form (111/1, 111/2 or 111/5 depending on the intended use of the reconstructed building) to the tax authorities in order to benefit from the reduced rate.

In this case, the tax authorities do not require the submission of the new declarations mentioned above.

When must the declaration be submitted?

In principle, the contractor must submit a declaration prior to the demolition and reconstruction work.

It is not possible to regularise VAT when the declaration is submitted after the VAT has become payable, except in cases of force majeure (e.g. serious illness of the client preventing them from submitting the declaration on time) or material error (e.g. the declaration is submitted but is incomplete or contains errors).

Transitional measures under the temporary regime: 6% VAT on sales until 30 June 2025

Until 30 June 2025, the sale of reconstructed dwellings could be invoiced at the 6% reduced VAT rate, provided that: (i) the demolition and reconstruction permit application was submitted before 1 July 2023, and (ii) VAT became chargeable no later than 30 June 2025.

New permanent regime: tolerance from 1 July 2025

In principle, the Program Law provides that the new regime enters into force on the date of its publication in the Belgian Official Gazette, i.e., 29 July 2025.

However, the tax administration has confirmed that sales of reconstructed dwellings completed between 1 July and 29 July 2025, which meet the conditions of the new regime, may also benefit from the 6% reduced VAT rate, provided certain formalities are complied with (see below).

The 6% reduced VAT rate applies to the sale of a demolished and reconstructed dwelling by a developer or seller to private individuals who will use the property as their sole and primary residence.

The seller may apply the 6% reduced VAT rate on the sale price if the following conditions are met:

• The buyer is a natural person
• The reconstructed dwelling has a total habitable surface area not exceeding 175 m²;
• The buyer assigns the dwelling as their sole and primary residence and moves in without delay;
  
  These conditions must remain fulfilled until 31 December of the fifth year following the year of first occupation or use.
  
  New rule: this condition is now assessed individually for each co-buyer. Under the former temporary regime, if one buyer did not meet this condition, none of the co-buyers could benefit from the 6% rate. Therefore, the seller must allocate the sale price proportionally to each buyer’s ownership share in the reconstructed dwelling.

• A declaration form 111/3 must be submitted (see below).

The 6% reduced VAT rate applies to the sale of a demolished and reconstructed dwelling by a developer or seller to investors who will dedicate the property to social housing rental.

The seller may apply the 6% reduced VAT rate on the sale price if the following conditions are met:

• The buyer is a natural or legal person;
• The reconstructed dwelling is not subject to any habitable surface area limitation;
• The buyer assigns the dwelling to social housing rental. 
  
  Meaning that: (i) it is rented directly to a recognized social housing agency or any other licensed public/private entity, or (ii) it is leased under a management mandate to such an entity;

• The buyer must ensure that the dwelling remains dedicated to social housing rental for 15 years.
  
  This period ends on 31 December of the fifteenth year following the year of first occupation or first use (i.e., the date on which the lease or management contract with the social agency takes effect).
  
  All conditions must be continuously met during this 15-year period;

• A declaration form 111/3 must be submitted (see below).

The 6% reduced VAT rate applies to the sale of a demolished and reconstructed dwelling by a developer or seller to investors who will dedicate the property to private long-term residential rental.

The seller may apply the 6% reduced VAT rate on the sale price if the following conditions are met:

• The buyer is a natural or legal person;
• The reconstructed dwelling has a total habitable surface area not exceeding 175 m²;
• The buyer dedicates the property to long-term rental to natural persons, who will establish their official residence in the dwelling without delay.
  
  The property cannot be used for non-residential purposes (e.g., student housing, vacation rentals).
  
  Because the rental must be directly between the investor and the tenant, the dwelling cannot be leased to operators who subsequently sublet the property (e.g., co-living companies). Conversely, if the works are invoiced directly to a co-living company that rents the units directly to individual residents (who officially establish their residence there), the 6% reduced VAT rate may apply, provided all other conditions are met.

• The dwelling must remain dedicated to private residential rental for 15 years, and these conditions must be met throughout this period;
  
  The 15-year duration must be evidenced by one or more registered lease contracts covering this entire period;

• A declaration form 111/3 must be submitted (see below).

The 6% reduced VAT rate does not apply to the portion of the sale price relating to:

• Swimming pools, saunas, mini-golf courses, tennis courts, and other similar facilities;
• Components of the specific part of a central heating system powered by fossil fuels, including burners and control devices connected to the boiler (effective from 1 July 2025).
  
  This second exclusion is tolerated by the tax authorities. In its circular 2025/C/47, it specifies that the reduced VAT rate of 6% may apply to sales of such equipment provided that they are supplied under a contract for the sale of a demolished and rebuilt dwelling (completed or under construction) that was concluded by 30 June at the latest and provided that the VAT is invoiced by 30 June 2026 at the latest.

Where applicable, the seller must separately itemise these excluded elements on the invoice.

In its Circular 2025/C/48, the tax administration confirms that sales of reconstructed dwellings for which reconstruction began or was completed before 1 July 2025 may still benefit from the 6% reduced VAT rate, provided that the conditions of the new permanent regime are met.

Examples illustrating the combination of regimes:

1. Off-plan sale – permit filed on 30 May 2023, 160 m² habitable surface area:

• • Until 30 June 2025: VAT invoiced could benefit from the 6% reduced rate.
    
    Indeed the permit application was filed before 1^st July 2023 allowing the seller to benefit from the reduced 6% rate on the basis of the temporary regime.

• • From 1 July 2025: VAT invoiced continues to benefit from the 6% reduced rate.

2. Off-plan sale – permit filed on 30 May 2023, 195 m² habitable surface area

• • Until 30 June 2025: VAT invoiced could benefit from the 6% reduced rate.
  • From 1 July 2025: VAT invoiced can no longer benefit from the 6% reduced rate if the buyer intends to use the dwelling as their own residence or for private residential rental.
    Indeed, the social criterion was reduced from 200 m² to 175 m² as of 1 July 2025.
    However, if the buyer dedicates the dwelling to social housing rental, the reduced rate may still apply, as this purpose is not subject to a surface area limit.

3. Off-plan sale – permit filed on 30 September 2024, 175 m² habitable surface area:

• • Until 30 June 2025: VAT invoiced was subject to the standard 21% VAT rate.
    Indeed, the project could not benefit from the transitional measures under the temporary regime (permit had to be filed before 1 July 2023).

• • From 1 July 2025: VAT invoiced may benefit from the 6% reduced rate, as the new permanent regime does not consider the date of the permit application.

As specified, the seller is required to file declaration form 111/3 – 1 July 2025 for sales of reconstructed dwellings.

System not yet available

It is currently not possible to submit these declarations via MyMinfin. The tax administration expects to make the electronic forms available starting October 2025.

Until 31 December 2025, the seller may apply the 6% reduced VAT rate provided that the following two statements are included in the sales agreement or the notarial deed:

• “Application of the 6% VAT rate for the demolition and reconstruction of a dwelling (Section XXXVII, §3, paragraph 2, 1°, a), b), or c)* of Table A annexed to the Royal Decree of 20 July 1970 setting VAT rates – permanent measure effective from 1 July 2025).”
• “The declaration referred to in Section XXXVII, §3, paragraph 2, 1°, a), b), or c)* above must be submitted via MyMinfin without delay as soon as the declaration becomes available.”

*to be specified according to the use intended for the building by the buyer

• • • 3, paragraph 2, 1°, a) → Sale of a reconstructed dwelling used as the buyer’s own residence
    • 3, paragraph 2, 1°, b) → Sale of a reconstructed dwelling for social housing rental
    • 3, paragraph 2, 1°, c) → Sale of a reconstructed dwelling for private residential rental

(NOTE: this is a free translation. For the exact FR / NL version that must appear on the invoice, refer to point 4.4 of the Circular 2025/C/48 in FR or NL).

Once the form becomes available, the seller must take the necessary steps to file the missing declaration via MyMinfin as soon as possible, and no later than 31 January 2026, for all transactions where this tolerance was applied.

The seller must then provide the buyer with a copy of the acknowledgment of receipt issued by the tax administration once the declaration has been filed.

Ongoing works before 29 July 2025

As previously indicated, it is possible that the sale involves a dwelling where demolition and reconstruction started before 1 July 2025. Under the transitional measures of the temporary regime, the sale of such a dwelling could benefit from the 6% reduced VAT rate.

Provided that the dwelling meets the reduced surface area requirement (175 m² instead of 200 m² under the temporary regime effective until 30 June 2025), invoices issued from 1 July 2025 onward may continue to benefit from the 6% reduced VAT rate under the new permanent regime.

Even if the seller had already submitted declaration form 111/3 under the temporary regime, the seller is still required to refile declaration form 111/3 – 1 July 2025. This is different from the regime applicable to works (input VAT), where the administration does not require project owners to refile Forms 111/1, 111/2, or 111/5 (see below).

When must the declaration be submitted?

The timing requirements differ depending on whether it is an off-plan sale or a completed dwelling:

• Off-plan sales: the seller may file the declaration up until the delivery of the dwelling. Delivery is considered to occur at the provisional acceptance of the dwelling.
  
  A seller who wants the buyer to benefit from the 6% reduced VAT rate on interim invoices must nevertheless file the declaration before issuing the first invoice.
  
  Otherwise, the buyer will need to pre-finance 21% VAT until the declaration is filed. The tax administration has announced a refund mechanism to regularise the 15% difference once the declaration is submitted.

• Sales of completed dwellings: the declaration must be filed no later than the execution of the sales agreement or the payment/invoicing of a deposit.
  
  It is not possible to regularise VAT if the declaration is filed after VAT has become chargeable, except in cases of force majeure (e.g., serious illness preventing timely filing) or material error (e.g., an incomplete or incorrect declaration initially filed).