A reduction in the VAT rate on new builds?

A reduction in the VAT rate from 21% to 6% for new builds—but why? A VAT reduction was introduced to improve Belgium’s environmental impact. The European Union has set clear targets for each of its members. Belgium must therefore get back on track, as must most other Member States. 

Why?

Today, many Belgian homes consume a great deal of energy because they are very old. Solutions to this problem must therefore be found. While renovating these homes or bringing them up to standard might seem the simplest solution, building a new home may sometimes be more advantageous. However, many Belgians do not take this step because they prefer to buy an existing property, even if it consumes a great deal of energy, due to the lower VAT rate. A solution therefore had to be found, and the chosen solution was to reduce VAT.

Objectives

At the time, the VAT rate on new builds was 21%. This was a very high rate that made building a house much less affordable. The idea is therefore to encourage Belgians to build their own homes so that they are more environmentally friendly. In the hope of making its housing stock more carbon-neutral, Belgium therefore decided to reduce the VAT rate on new builds from 21% to 6%. It is hoped that this significant VAT reduction will enable Belgium to achieve its targets by 2050.

However, it is important to bear in mind that this reduction is intended to encourage the construction of more sustainable, environmentally friendly properties. It is therefore not an insignificant decision; its purpose is to enable Belgians to play a full and active role in improving the country’s housing stock. This is a collective effort in which everyone can and must participate.