"a missed opportunity for the real estate sector," say KPMG experts. This past weekend, the Belgian federal government has reconsidered a decision made in the Summer Accord. In order to improve the competitiveness of the Belgian real estate sector, an optional system was to be implemented as of 1 January 2018 which would also make the rental of real estate subject to VAT.
Up until now, the rental of real estate such as commercial buildings is, in principle, exempt from VAT. This does make the VAT that a lessor pays on the establishment, refurbishment and renovation non-deductible, resulting in higher rental prices.
Veerle Coussée, real estate expert at KPMG in Belgium: "Today, lessors take these VAT costs into account, and will then charge those VAT costs to the lessee which results in higher rental prices in Belgium than in neighboring countries. When lessors can fully deduct the VAT, they will not need to charge these costs to lessees and they, in turn, will pay a lower price."
The current regulation not only creates a considerable cost for lessees, but also a significant competitive disadvantage for Belgian real estate players because our neighboring EU countries do provide for VAT on the rental whereby the accumulated VAT on the purchase and renovation costs on the part of the lessor is deductible.
Jeroen Gobbin, Head of Indirect Tax at KPMG in Belgium: “In the Summer Accord, the federal government made provisions to give lessors the option of having professional real estate rental contracts be subject to VAT, with right of deduction of the VAT on the purchase and establishment costs as of 1 January 2018. This would be a drastic and positive change for the Belgian real estate sector. Yesterday, it was decided that this measure would not be implemented, after all. This is definitely a missed opportunity for the real estate market in our country."
Benjamin Muylaert-Gelein – PR Manager
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