The low VAT rate of 6% for demolition and reconstruction works will come to an end. The federal government did not find an agreement on the extension of the measure. An “irresponsible policy” according to Flemish Minister of Budget and Finance Matthias Diependaele.
Last week, the sector federation Embuild already sounded the alarm, because the deadline for an extension of the measure was approaching. Those who demolish and rebuild their home could enjoy a favorable VAT rate of 6 percent instead of 21 percent for a few years.
But the measure – introduced in 2020 to boost the construction sector during the corona crisis – is being overhauled. That can be read in the newspapers on Wednesday Media house. No consensus was found among the majority parties to extend it, confirms the cabinet of Finance Minister Vincent Van Peteghem (CD&V). The abolition is a blow for people with renovation plans.
‘Irresponsible’
Flemish Minister of Finance and Budget Matthias Diependaele (N-VA) reacts sharply and speaks of “irresponsible policy”. “Vivaldi has kept the construction sector in legal uncertainty for years by not providing a long-term perspective on this measure,” says the N-VA minister. According to Diependaele, many Flemish people counted on the reduced VAT rate to realize their project. “But the costs will increase by 15 percent on January 1. I fear that many Flemish people will put their project on hold for the sake of affordability,” says Diependaele.
“Just when building and borrowing for your own home is becoming more expensive, the federal government is giving the neck shot to the building plans of many Flemish people. The construction sector will certainly feel this decision by Minister Van Peteghem,” concludes the N-VA minister.
Other fiscal measures
Last week, the construction federation Embuild also sounded the alarm. “This tax incentive is the lever to accelerate our aging housing stock and make it energy-neutral in a timely manner,” Niko Demeester, CEO of Embuild, said at the time. “The past few years have shown that this incentive works very well.”
The reduced VAT was maintained in the original plan of the tax reform of Minister of Finance Vincent Van Peteghem (CD&V). The revenue that the state would miss out on due to reduced VAT was compensated elsewhere. Only his proposal for the tax reform was canceled just before the summer holidays. The parties of the Vivaldi government failed to reach a mutual agreement.
“If this VAT reduction is not extended after 2023, the price for energy-efficient construction and renovation will become a lot more expensive for the consumer,” warns Demeester. The temporary VAT reduction of 6 percent on solar panels, solar boilers and heat pumps in homes less than ten years old will also expire at the end of 2023. The construction federation also wants to see this fiscal incentive permanently extended.
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2023-09-06 16:39:06
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