Recent VAT developments in the Belgian real estate sector

International Tax Review is part of Legal Benchmarking Limited, 4 Bouverie Street, London, EC4Y 8AX

Copyright © Legal Benchmarking Limited and its affiliated companies 2025

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Recent VAT developments in the Belgian real estate sector

belgium2.jpg

Given the complexity of the Belgian VAT regime on immovable property and the magnitude of the VAT amounts at stake, VAT has always been an important aspect in the Belgian real estate sector.

haouari.jpg

ackerman.jpg

Samir Haouari


Peter Ackerman

The pace at which these VAT rules evolve requires businesses to be watchful and to react accordingly. Also in the first half of 2012 there have been some interesting developments, notably in connection to the VAT revision period as well as to the VAT exempt immovable rent. As a general rule VAT taxpayers can immediately deduct input VAT they incur. However, specifically for investment goods, as the legislation foresees in the period during which the initial VAT deduction can be revised should the investment goods no longer be used for the taxable activities. For immovable property this revision period equals 15 years. In the past the 15-year period started on January 1 of the year in which the VAT became due (at the moment of the supply unless the invoice is issued or the payment is received before the supply in which case the VAT would become due on that previous point in time). According to a recent administrative decision which took effect from January 1 2012, the VAT revision period starts on January 1 of the year in which the immovable property is taken into use. In practice this comes down to an extension of the VAT revision period, certainly in situations where the construction and the invoicing are spread over multiple years.

Another important development relates to a Belgian court case on the VAT exempt immovable rent. An immovable rent is in principle VAT exempt in Belgium and does not grant any right to deduct input VAT. Hence the reason why many taxpayers seek for VAT-able alternatives that will enable them to deduct the often large amounts of input VAT they incur in connection to the building. Since the Temco-case of the European Court of Justice in 2004, it has been generally accepted that the essential object of a VAT-exempt immovable rent is the passive manner in which the immovable property is put at the disposal irrespective of whether the tenant has an exclusive enjoyment of the immovable property. However, recently the Brussels Court of Appeal leaned towards a more civil law approach by stating that the exclusive enjoyment is an essential element to constitute a VAT exempt immovable rent.

With respect to the revision period the new administrative point of view provides a clear and workable ground rule, although not always beneficial for the taxpayer. In relation to the VAT exempt immovable rent, the interpretation of the court limits the scope of the VAT exemption and could therefore create opportunities. The practical impact is however less clear, certainly given the fact that Belgian authorities did not yet officially react to this judgment.

Samir Haouari (shaouari@kpmg.com) & Peter Ackerman (packerman1@kpmg.com)

KPMG

Tel: +32 2 708 43 00

Website: www.kpmg.com/be

more across site & shared bottom lb ros

More from across our site

The cuts disproportionately affected staff in certain positions, the report also found; in other news, MHA announced the €24m acquisition of Baker Tilly South East Europe
The plan aims to improve the efficiency, transparency, and effectiveness of direct tax administration in India
Meanwhile, South Africa’s finance minister has accepted a court decision on suspending a VAT increase and US President Donald Trump mulls a 100% tariff on foreign films
Jaime Carey speaks about the benefits of his tax background, DEI values, the use of AI for a smarter legal practice, and other priorities that will define his presidency
Historically low levels of attrition over consecutive years made a ‘difficult decision’ necessary, PwC has reportedly said
WTS Global is also vetting new potential member firms in Algeria, Cote D’Ivoire and Benin, Kelly Mgbor tells ITR in an exclusive interview
The scope of qualifying pillar two tax credits could reportedly be broadened; in other news, hundreds of IRS appeals staff are to resign
For many taxpayers, the prospect of long-term certainty that a bilateral APA offers can override concerns about time, cost and confidentiality
Levine, who served under the Joe Biden administration, led the US’s negotiations on the OECD’s two-pillar solution
The deal to acquire ITR's parent company is expected to complete by the end of May 2025
Gift this article