Royal Decrees for reduced VAT rate for electricity, gas, solar panels and heaters, and mouth masks
Three Royal Decrees implementing the decisions of the Belgian Council of Ministers concerning the temporary reduction or extension of the application of reduced VAT rate as we previously reported, have been published. These Royal Decrees concern the following:
- Mouth masks and hydroalcoholic gels: Royal Decree extending the application of the reduced VAT rate of 6% for the supply, intra-Community acquisition and import of mouth masks and hydroalcoholic gels used in the fight against Covid-19, to the period from 1 April until and including 30 June 2022, is published in the Belgian Official Gazette here. Note that the import of mouth masks and hydroalcoholic gels used in the fight against Covid-19 is exempt until and including 30 June 2022 from import duties and import VAT. This exemption from import VAT takes precedence over the application of the temporary reduced VAT rate of 6%.
- Electricity, gas and heat: Royal Decree providing for a temporary application of the reduced VAT rate of 6% for the supply of electricity, gas and heat through heat networks for residential contracts until and including 30 September 2022, is published in the Belgian Official Gazette here.
- Solar panels and heaters: Royal Decree providing for a temporary application of the reduced VAT rate of 6% for solar panels, heat pumps and solar water heaters is made available on the website of the Belgian Tax Authorities here. More precisely, the reduced VAT rate applies in the period from 1 April 2022 until and including 31 December 2023 to immovable work involving the supply with installation of (photovoltaic and thermal) solar panels, solar water heaters and heat pumps on or in the close proximity of dwellings. The terms of application of this temporary measure are specified as follows:
- The immovable work must be rendered and invoiced to an “end-user”. This notion covers mainly private dwellings of individuals, but also recognized elderly homes, boarding schools, recognized residential youth homes, recognized homeless shelters, and recognized psychiatric and mental homes.
- The immovable work must concern a dwelling which is, after the works, exclusively or primarily used as a private dwelling.
- The immovable work must relate to a dwelling younger than 10 years. For dwellings older than 10 years, the possibility to apply the reduced VAT rate is already available under the current rules for immovable work.
- With respect to thermal solar panels, solar water heaters and heat pumps, the reduced VAT rate only applies for the supply of heating systems (such as solar water heaters and heat pumps) which meet certain emission standards. Since most solar water heaters and heat pumps produce no or almost no emissions, such heating systems will meet the emission standards. For “hybrid” systems that also use fossil fuels, it will have to be checked whether the additional heating system that uses fossil fuels and is connected with the solar water heater meets the emission standards.
- The invoice issued must mention a specific statement justifying the application of the reduced VAT rate. The customer has the right to challenge these conditions and the application of the reduced VAT rate within one month after the receipt of the invoice. When the customer does not challenge these conditions, the customer becomes liable for the correct application of the reduced VAT rate (and potential assessment of VAT, fines and late payment interest). Similarly to renovations, this statement on the invoice replaces the system of the certificate for immovable work, as we previously reported (see: Adopted amendments to the Belgian VAT Act (mytaxcompass.be) and Update on proposed amendments to the Belgian VAT Act (mytaxcompass.be) ).
Please note that the reduced VAT rate does not apply to technical installations that are exclusively used for the supply of energy or heat to parts of the dwelling that are not used for habitation sensu strictu (such as swimming pools, sauna’s,…).
The above-described temporary VAT rate reductions are welcome measures under the current energy prices. At the same time, these can also help to stimulate the process of energy transition towards the use of more sustainable and green resources. If you would like to know more about the above-described measures or other VAT matters, do not hesitate to contact us.