Posted: 04 Feb. 2025 3 min. read

VAT measures included in the Federal government agreement

Tax Law | Legal Newsflash

On 31 January 2025, a Federal government agreement was reached (Dutch/French). The main themes for VAT are the introduction of near real time reporting accompanied by administrative simplification, changes to the VAT rates to support the necessary climate shift and the expansion of the VAT regime for demolition and reconstruction. The government also strives for a better relationship between the Administration and the taxpayer by increasing legal certainty and changing the VAT sanction policy.

Near real time reporting

As of 2028, near real-time invoice reporting will be introduced for transactions between VAT taxpayers and transactions for which a registered cash register is used. Extra support will be provided for small businesses and the self-employed, and attention will be given to respect the professional confidentiality. 

By introducing near real time reporting, following e-invoicing which will enter into force on 1 January 2026, cash registers, payment and invoicing systems will be connected to the administration and will automatically transmit VAT data. This will result in a significant reduction in administrative VAT obligations for businesses through the abolition of the client listing and will significantly reduce the possibility of VAT fraud as a result of the optimisation of data mining and the knowledge of the control services.

Furthermore, the daily receipt book and the diverse VAT registers will be amended, simplified or abolished to the extent possibly by using existing audit possibilities and information available to the tax authorities. 

VAT regime for demolition and reconstruction

The existing VAT regime for demolition and reconstruction will be expanded to developers, while maintaining the social conditions. The surface criterion will be limited to 175 m2 for supplies (by developers). In addition, definitions of ‘renovation’ and ‘new building’ will be established. 

The government will also investigate how to introduce a sustainability condition in the future European VAT legislation, without additional administrative burden.

White cash register

The white cash register will be applicable to the entire hospitality industry and will expand to fraud-sensitive parts of the retail sector. The nominal threshold of EUR 25.000, is maintained but its calculation methodology will be amended. Support will be provided to facilitate these changes. 

VAT rate changes

The government agreement takes several initiatives to address the climate shift. The VAT rate for heat pumps will be lowered from 21% to 6% for the upcoming five years. Simultaneously, the VAT rate on coal will increase to 21%, and the VAT on the installation of a boiler using fossil fuels will be increased from 6% to 21%, in the event of the renovation of dwellings older than 10 years. 

Other changes

VAT sanction policy

The VAT sanction policy will be modernized and will consider the absence of financial damage to the treasury as an attenuating circumstance.

VAT lottery

The system of VAT lottery by customers/clients will be investigated to encourage receipt request and to reduce tax fraud.

Gifts

The tax treatment (VAT-neutral) of food and non-food donations (except specific categories like alcohol) to not-for-profit organizations is being reviewed. The ‘15 days’ rule is, in well-defined situations, replaced by part of the lifetime of the food product. The list of luxury products, durable products, or non-essential products currently excluded from the regime will be reviewed to expand the list of goods that can be donated.

Company bicycles

A circular letter will be published on the ‘flat rate’ right to deduct VAT on company bicycles with mixed use. 

Cross-border purchases

The packaging tax will be reduced for all products that are significantly more expensive than in neighbouring countries to discourage cross-border purchases.

Legal certainty

A few measures are being taken to increase legal certainty: taxpayers will have direct access to the tax inspector, there will be mandatory publication by the tax authorities of all case law in which they are involved, along with the commitment to publish administrative circulars and amend administrative commentaries shortly after the publication of new legislation. 

Conclusion

The increasing automation through the introduction of near real time reporting, the expansion of the white cash register and the administrative simplification, require another adjustment of taxpayers’ processes. At the same time, legal certainty will increase, and the sanction policy will be modernised. 

Other measures such as the expansion of the regime for demolition and reconstruction, and the higher VAT rates for polluting fuels will hopefully give a boost to the real estate sector by addressing the shortage of affordable housing and push Belgium towards a climate shift.

Key contacts

Danny Stas

Danny Stas

Partner

Danny is head of the tax advisory practice. He is a tax lawyer specialised in VAT, in particular with respect to real estate and financial transactions, as well as eco taxes and contributions. As partner in the firm, Danny focuses on VAT consulting for Belgian clients in the private and public sectors and the broad corporate market at national and international level. In the real estate industry, Danny focuses on VAT consulting for clients in the private (e.g. real estate developers, REITs, hospitals, senior housing, etc.) and public sectors and the broad corporate market at national and international level. Besides the specific VAT topics (e.g. reduced VAT rates, VAT exemptions), he has also good knowledge of alternative financing of real estate and transfer duties. Danny is a recommended lawyer in the Chambers Europe and Legal 500 directories.