VAT on the rental of new real estate

VAT on the rental of (professional) new real estate: recuperation of historical VAT

Peter Empsten
01/04/2019
VAT on the rental of new real estate

As mentioned in our newsletter of September 2019, in its Summer Agreement of July 26, 2017, the federal government introduced the optional VAT levy on the rental of (professional) new real estate.  This entered into force as  of January 1, 2019. 

One of the consequences of the new regime is that the landlord can deduct the incoming VAT paid on the building costs.   On the other hand, also the historical VAT can be revised. This is the VAT that became claimable before January 1, 2019 but that could not be deducted before.  More specifically, it concerns VAT on:

  • Real estate work relating to buildings or part of buildings that can benefit from the new regime insofar this real estate work contributes to the construction of buildings for which the VAT became claimable as from October 1, 2018.
  • Intellectual services ( architects, land surveyors, …) relating to the above mentioned buildings also when the VAT became claimable before October 1, 2018.
  • Works related to the prior demolition of buildings with the purpose to build buildings falling under the new regime also when the VAT became claimable before October 1, 2018.
  • Works relating to the ground (excavation, remediation, stabilization works) on which a building will be build , also when the VAT became claimable before October 1, 2018.

This historical VAT can be deducted in the first VAT return of 2019 but only to the extent that there is an amount of VAT due.  A possible balance must be transferred to the following VAT returns until the last VAT return of 2019.  It is only then that a balance can be actually reclaimed. It is therefore waiting until the beginning of next year to recover the historical VAT. 

Example:

Historical VAT: EUR 50.000

VAT due following the first VAT return of 2019: EUR 20.000

Only EUR 20.000 can be deducted. EUR 30.000 must be transferred to the next quarters.

In case there further is no amount of VAT due in quarter 2 and 3, the amount can only be reclaimed in the last VAT return of  2019.

 

This means a prefinancing of (part of) the historical VAT until the beginning of 2020!