Proposal to extend the reduced VAT rate for demolition and reconstruction of residential property until the end of 2024
Last Friday, the bill has been submitted by means of which the temporary regime on the reduced VAT rate of 6% for demolition and reconstruction would be extended until the end of 2024 (as opposed to the 2023 as publicly announced earlier).
The twofold objective is to further enhance the renewal of residential property and to support the influx of high-quality homes on the social rental market. The view is taken that the various players in the real estate sector have made themselves familiar with the concrete conditions, practical applications and other modalities of the temporary regime entailing that these would remain unchanged. Given the large variety and specific nuances in projects, it is however recommended to review these case by case to ensure that all the conditions are met.
In order to prevent abuse, only 25% of the amount of the works are eligible for the application of the reduced rate from 6% in case the environmental permit has been submitted after July 1, 2024. Similar to the current rules, we would expect that this would not apply for the mere sale (on plan) of residential property.
