How to enjoy the reduced 6% VAT rate on new buildings

The reduction of the VAT rate for demolition and new construction projects is one of the positive side-effects of the corona crisis. The temporary fiscal measure introduced by the federal government at the beginning of this year consists of a VAT reduction from 21 to 6%. This 15% discount can save you tens of thousands of euros. So, if you are still hesitating between new construction or renovation, this could be a decisive factor. Now that all the rules are clear, let’s clarify when you are eligible for this favourable rate.

All the conditions for 6% VAT for demolition and reconstruction

You as buyer

It’s crucial the new building is your only and own private residence. However, an exception is made for inherited property or properties over which you have usufruct or bare ownership. Furthermore, as a natural person, you must live in the property for at least five years. If you do move before that time, you will have to refund the saved VAT pro rata. Again, exceptions are provided for force majeure situations such as divorce, moving for professional or medical reasons, death or destruction of the new building. The reduced VAT rate does not apply to landlords and companies.

Your new building project

First and foremost, the project must be considered to be a reconstruction. In concrete terms, this means that demolition work has previously taken place on the same cadastral plot. An old barn, factory building or office: the function of the demolished building is of no importance. The measure applies to both newly built flats and houses with a maximum habitable surface area of 200 m². This includes all living areas measured from and to the inside of the walls. Rooms smaller than 4 m², and with a maximum height of 2 m above the floor are not included. In addition, the VAT amount due at the time of purchase must be due within the period of the measure (from 1 January 2021 to 31 December 2023).

If you meet all the conditions, purchasing a newly built home until the end of 2023 is financially very advantageous. Are you currently looking for a new property? Make sure you check whether it qualifies for the reduced VAT rate.

Take a tour of our new buildings portfolio here. This current project is eligible for the reduced 6% VAT rate:

For more information, please don't hesitate to contact our team via 078/48 47 00.

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How to enjoy the reduced 6% VAT rate on new buildings