Belgium: VAT and lease agreements for immovable property

Belgium: VAT and lease agreements, immovable property

A measure under the federal government’s framework for a budget agreement provides that beginning 1 January 2018, it would be possible to subject new immovable property lease agreements to value added tax (VAT).

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Until now, the lease of immovable property in Belgium has been exempt from VAT (there are some exceptions such as the rent of storage space, hotel rooms, car parking space, immovable finance lease, etc.). This exemption from VAT means that VAT on the acquisition or construction of immovable property is not deductible by the owner (and the amount of VAT can be a significant cost).

The introduction of an option for VAT on real property lease agreements would result in VAT being applied on the lease payments—but it also would grant the owner the right to deduct the input VAT incurred on the acquisition or construction of the immovable property. In addition, VAT-able tenants would be able to recover the VAT on the lease payments.

KPMG observation

While details regarding the conditions of the option are not yet available, the ability for VAT on lease agreements would apparently apply to new immovable property lease agreements concluded as from 1 January 2018.

 

Read an August 2017 report prepared by the KPMG member firm in Belgium

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