Many VAT audits of the 6% VAT rate for demolition and reconstruction

The VAT audits mainly focus on the following key points:

• the habitable floor area
• ownership of other homes
• the purpose and use of the home
• the administrative obligations

Anyone who does not strictly meet all conditions risks a reassessment to the standard rate of 21%. This means an additional VAT cost of 15%, plus penalties and late-payment interest. An incorrect floor-area calculation, an overlooked bare ownership interest, or a change of use during the works can be enough to lose the benefit entirely.

Our VAT team can support you with the prior assessment of projects, verification of the conditions, and assistance during tax audits.

Main points of attention for the 6% rate

Below we briefly outline the key points of attention.

1. Habitable floor area

The maximum habitable floor area is:

• 175 m² in the case of a sale by a professional developer;
• 200 m² for a private developer.

This concerns only the habitable floor area, such as living areas, the kitchen, an office, and bedrooms. Bathrooms, hallways, stairs, storage rooms, garages, and common areas generally do not count.

In practice, the tax authorities often rely on the environmental permit. Discussions may arise, for example, if a room is shown as a living area on the plans while the developer uses it as storage. Attics and basements also require attention: once they are insulated and finished, they are usually considered habitable.

2. No other home owned

The buyer or private developer may not own any other home, not even in bare ownership.

Until 30 June 2025, married couples and registered cohabitants were considered as a single unit. If one partner owned a home, the other partner also lost entitlement to the reduced rate.

Since 1 July 2025, eligibility is assessed per partner separately. This change does not apply retroactively.

3. Purpose of the home

The home must be:

• occupied effectively as the owner’s main residence for at least five years, or
• let for at least fifteen years.

A change of purpose can have far-reaching consequences. For example, where rental was originally chosen but the owner later moves into the property, the tax authorities consider this a new purpose. In that case, the 6% rate may be reassessed, without a second VAT benefit being available.

4. Administrative obligations and compliance with the minimum period

The five- or fifteen-year period runs up to and including 31 December of the fifth or fifteenth year following first occupation.

Example: if the home is first occupied on 1 October 2025, the owner must continue to live there until 31 December 2030.

If the occupation or rental ends early, a proportional part of the VAT benefit must be repaid. For instance, someone who moves after two years will, in principle, have to repay 3/5 of the difference between 21% and 6%.

In addition, it remains crucial to submit the required declarations in due time.

Conclusion

The reduced 6% VAT rate for demolition and reconstruction remains particularly attractive from a tax perspective. At the same time, it requires meticulous follow-up of all formal and administrative conditions. The tax authorities are auditing ever more strictly, and even seemingly minor deviations regarding floor area, ownership position, or use can have significant financial consequences.

A prior analysis and correct documentation are therefore anything but a luxury.

Our PKF BOFIDI experts are here to help

Our VAT team supports you from the prior assessment of your project through to full assistance during tax audits, ensuring everything is handled correctly.

Do you have questions or would you like support? Contact our experts.

This article was written by Gladys Cristiaensen