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Jun 16th
Home arrow News arrow Row over VAT on land

Row over VAT on land

A row has erupted in the federal parliament about change of the VAT legislation to charge VAT on land.

On a sale of property a registration tax (stamp duty) is due at 12.5 % (10 % in Flanders).  New properties, however, are sold with 21 % VAT instead. When a property developer sells a new apartment in Brussels, the buyer will have to pay 21 % VAT and 12.5 % registration tax on the land.

In the draft budget, the government agreed to charge 21 % on both the land and the built property. Finance Minister Reynders argued that Belgium was obliged to do this under European law.  He referred to the Breitsohl judgment of the Court of Justice that dates back to 2000.

Remarkably, VAT is a federal tax, while the registration tax is a regional tax.  The regions are claiming that they are being robbed of millions of euros. And consumers see the price of houses increased by some 8 to 10 %.  Last Thursday, it was revealed that the change in the VAT law was triggered by a threat of Walloon soil decontamination company SPAQUE. If they have to sell decontaminated land with 12.5 % tax, they cannot recover some 20 millions in VAT on the decontamination work. The Finance Ministry had to cave in and saw no alternative but to apply the same rule to everyone.

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