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Belgian Parliament Approves Legislation for Optional VAT Regime for Leasing of Business Property — Orbitax Tax News & Alerts

On 4 October 2018, the Belgian parliament approved the draft bill for the implementation of an optional value added tax (VAT) regime for the leasing of immovable property used for business. Under current rules, the leasing of immovable property is generally exempt from VAT, which results in the inability of property owners to deduct input VAT incurred on the construction and renovation costs of the property they lease. The new regime allows an owner and tenant to opt to have lease payments subject to VAT (both must agree), provided that the property is used for business purposes and the tenant is a VAT taxable person. The option is specified in the owner/tenant contract and does require special notification to the VAT authority.

The option is available from 1 January 2019 in respect of newly constructed buildings and buildings that have undergone major renovations to the extent that they are essentially new buildings where VAT is first due on construction or planning activities as at 1 October 2018. If the option is taken, a VAT recapture period of 25 years will apply.