Reduced VAT rate for demolition and reconstruction extended by one year
The federal government has decided to extend the reduced 6% VAT rate on demolition and reconstruction by one year beyond 2022. The measure was originally set to expire at the end of this year. The Confederation of Construction has long advocated for an extension and is therefore very pleased that it is now being implemented. “It’s a measure that’s good for the climate and people’s purchasing power,” says Niko Demeester, CEO of the Confederation of Construction. “Demolition and reconstruction allow for a significant reduction in a home’s energy consumption, which is very important now that energy prices are skyrocketing.” The sector federation is also enthusiastic about the reduction of the VAT rate to 6% for heat pumps and solar panels, including for new construction.
The Confederation of Construction has been calling for some time to extend the temporary general VAT reduction from 21% to 6% on demolition and reconstruction. According to the sector federation, an extension of this measure was necessary to provide certainty for projects that are currently still in the early stages but for which permits will be issued shortly and demolition must then take place (archaeological surveys, soil investigations, etc.). After all, this means that actual construction cannot begin until after December 2022.
Even when it comes to larger construction projects (e.g., more than 10 apartments), it is not realistic to meet that construction deadline by the end of December 2022. The result would have been that many buyers would have been deterred from purchasing dilapidated buildings slated for demolition. They would be willing to buy, but understandably, they want the assurance that they can benefit from the 6% VAT rate.
Niko Demeester, managing director of the Confederation of Construction: “In most cases, demolishing and rebuilding outdated buildings is much better for the climate and the environment than partial renovation. It also reduces the pressure to develop new building sites. We are pleased that the federal government is acting on this. Of course, the specific implementation details of this measure still need to be clarified.”
The industry association is also enthusiastic about the reduction of the VAT rate to 6% for heat pumps and solar panels—including for new construction—and about making government buildings more energy-efficient.
