Private dwellings not older than 10 years: 6% VAT for solar panels, heat pumps and solar boilers

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Pascal Vanzieleghem
23 Jun 2022
Subject Tax alert
Categories Indirect Tax
Jurisdictions Belgium

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Residential dwellings in use for less than 10 years can now temporarily also benefit from the reduced 6% VAT rate for the supply & installation of solar panels, heat pumps and solar boilers.

The Belgian Government has decided to extent the application of the reduced VAT rate of 6% for the supply and installation of solar panels, heat pumps and solar boilers to private dwellings in use for less than 10 years. More specific, the reduced VAT rate will be applicable as from 1 April 2022 until 31 December 2023. This reduced VAT rate was previously only applicable for private dwellings older than 10 years.

In a recently published FAQ the authorities have now provided more details on the application of the temporarily reduced VAT rate and have elaborated on situations in which the reduced VAT rate can or cannot be applied.

This new measure is subject to the following specific conditions which should be cumulatively met in order to apply the reduced VAT rate:

  • the works are performed on a dwelling that has been in use for less than 10 years before the date of the first invoice issued related to those works performed;
  • the dwelling, after those works, is used exclusively or mainly as a private dwelling;
  • the works are invoiced (including specific references) and supplied to the end customer; and
  • the installation must comply with certain reference standards on emissions as provided in the European regulations.

If at least one of the imposed conditions is not met, the standard VAT rate of 21% will be applicable and the end customer (if he has not contested the incoming invoice subject to 6% VAT), will be liable for the payment of the additional VAT amount, interest and penalties due in this respect.

Moreover, the reduced rate is not applicable for technical installations which are solely used for the energy or heat supply of elements of the dwelling not used for habitation in the strict sense, such as swimming pools, saunas and similar installations. Also the mere supply of the equipment, without installation, cannot benefit from the reduced VAT rate.

In order to maintain a good relationship with your customers, it is key to verify upfront whether the reduced VAT rate can be applied on the performed works/installation. As such, you can avoid as a supplier that your customers are confronted with any imposed penalties by the Belgian authorities. EY can assist with a VAT check for the application of the reduced rate on your activities.