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This news item focuses on the VAT and other tax measures in the draft program law. Separate news items cover the income tax measures and the tax procedures.

The draft Program Law introduces a permanent 6 percent VAT rate for the supply of dwellings, following demolition and reconstruction, to individuals that will use the dwelling as their own and only home or for long term rental.

The 6 percent VAT rate remains applicable under the current existing regimes and conditions to the demolition and reconstruction of dwellings by individual-builders who will use it (i) as their own and only home; (ii) for long-term social rental; or (iii) for long-term rental to individuals who will have their domicile in the dwelling.

The supply of dwellings can currently only benefit from the reduced 6 percent VAT rate under the specific transitional measures expiring on 30 June 2025. As from 1 July 2025, the reduced VAT rate of 6 percent will become permanently applicable to the supply of new dwellings following demolition and reconstruction, provided that the dwelling will be used by the individual-buyer as  (i) its own and only home, (ii) for the long-term social rental or (iii) long-term rental to individuals who will have their domicile in the dwelling.

The only difference with the current existing regimes is that for the supply of dwellings, the living area may not exceed 175 m² (where for the existing regimes the threshold is and remains 200 m²). Exceptions remain for social housing where the 200 m² condition is currently not applicable either. The new law also adds that in case the dwelling is reconstructed or bought by multiple persons, the condition of own and only home must be evaluated for each builder/buyer separately.

The reduced VAT rate will as from 1 July 2025 also no longer apply to the supply and installation of the specific components of central heating installations operating on fossil fuels.

The above changes will apply for VAT becoming chargeable as from 1 July 2025 onwards. 

The reduced VAT rate of 6 percent will no longer be applicable to the supply and installation of the specific components of central heating systems that operate on fossil fuels, including the burners and the control- and monitoring devices. This amendment will apply as from 1 July 2025. 

The currently applicable reduced VAT rate of 12 percent on the supply of coal will be abolished. This amendment will apply as from 1 July 2025.

Following the report of the Court of Audit (i.e., Rekenhof/Cour des Comptes), two rebuttable presumptions of tax abuse will be introduced for (i) the conversion of financial instruments held in a taxable securities account (i.e. total value of taxable financial instruments in the relevant account exceeds EUR 1,000,000) into nominative financial instruments that are not held in a securities account and for (ii) the transfer of part of the securities from a taxable securities account into one or more other securities accounts, in so far the accountholder of the first account is also (co)accountholder of the account(s) to which the securities are transferred. Both presumptions can be rebutted if the accountholder proves that the transaction is primarily justified by other motives than avoidance of the tax.

Additionally, the Program Law will introduce a reporting obligation to enable effective monitoring of the proposed measure - for Belgian financial intermediaries (cf. Belgian securities accounts) and for accountholders (cf. non-Belgian securities accounts), the details of which will be elaborated in secondary legislation (i.e. Royal Decree). Non-compliance with the reporting obligation will be subject to fines ranging from EUR 250 to EUR 2.500.

The tax that will be due as result of the (rebuttable) presumption, will need to be declared and paid by the accountholder himself/herself.

The proposed changes will apply as from 1 July 2025 and the reporting obligation will have to be carried out for the first time by 31 October 2025. 

The rate structure of the flight tax (also referred to as embarkation tax) will be simplified. The tax rate will be EUR 10 for flights up to 500 km, and EUR 5 in other cases (instead of EUR 2 or 4). The new rates will apply as from 1 July 2025.