In the framework of the summer agreement of the Federal Government, a striking measure was agreed upon. As from January 1st 2018, it will be possible to subject new immovable property lease agreements to VAT.
Until now, the lease of immovable property in Belgium is exempt from VAT (there are some exceptions such as the rent of storage space, hotel rooms, car parking space, immovable finance lease, etc.). This VAT exemption implies that the VAT on the acquisition or construction of the immovable property is not deductible by the owner. Hence, the VAT is a cost which can be significant.
The introduction of an option for VAT taxation will on the one hand result in VAT being applied on the lease installments but will also grant the owner the right to deduct the input VAT incurred on the acquisition or construction of the immovable property. In addition VAT taxable tenants will be able to recover the VAT on the lease installments.
Details regarding the conditions of the option are at this moment not yet available. The option for VAT taxation would however already apply to new immovable property lease agreements concluded as from January 1st 2018.
As soon as more information is available, we will inform you.