Landlord and tenant opt for the application of VAT
Landlord and tenant should opt together to apply VAT to the rent. The tenant should use the immovable property for its economic activity (an exempt VAT payer, e.g. a doctor, also qualifies).
When both parties opt to apply VAT to the letting of the immovable property, this option applies for the complete duration of the contract. When entering into a new agreement or extending the existing agreement, parties will decide again whether or not to opt for VAT.
1 October 2018 is a crucial date
The new rules apply as from 1 January 2019. But 1 October 2018 is a crucial date. Opting for VAT can after all only for new or renovated buildings for which VAT became due as from 1 October 2018. This means that before that date no invoice was issued or advance was paid.
Also for a part of a building
The letting of a part of a building with VAT is possible. A part of a building is a part which can be exploited separately (e.g. rented or used) and which is directly accessible from outside.
First exception: short term rent always subject to VAT
A rent for a period not longer than six months, is a short term rent. This is always subject to VAT.
It wouldn’t be Belgium if there were no exceptions to the exception. A short term rent is not subject to VAT:
when the building is used for habitation;
when the tenant is a private individual using the building for private reasons;
when the tenant is a not for profit organisation;
when the building is used for social and/or cultural activities.
Second exception: always VAT on …
VAT should always be charged on:
parking space for vehicles;
furnished lodging in hotels, motels, …
permanently installed machinery;
safe deposit boxes.
Third exception: storage space
For buildings used for storage space for goods, separate rules apply:
Renting of warehouses and storage space with VAT also for existing buildings: the rule that only buildings for which VAT became due after 1 October 2018, does not apply here. Renting of warehouses with VAT is easier.
Today renting of storage space is already an exception to the VAT exempt immovable letting. So currently also VAT is due. This exception will as from 1 January 2019 only be applied in case the option for rent with VAT does not apply, e.g. because the tenant is a private individual.
The 10%-rule stating that maximum 10% of the warehouse can be used as office for the storage activity, is deleted. It suffice that the building is used for more than 50% as storage space. There is however a new limitation: the building can be used for maximum 10% as sales area.