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VAT rate reductions in light of the energy prices and Covid-19 pandemic

The Belgian Council of Ministers took several decisions concerning the VAT legislation on 18 March 2022. These decisions are related to the Covid-19 pandemic as well as to the rising energy prices. Most importantly, the decisions include the following:

  • Mouth masks and hydroalcoholic gels: The Belgian Council of Ministers approved a draft Royal Decree which extends the application of the 6% VAT rate for the supply, intra-Community acquisition and import of mouth masks and hydroalcoholic gels used in the fight against Covid-19. This temporary measure is currently applicable until 31 March 2022, but its application will be extended with three months, i.e. from 1 April until 30 June 2022.
  • Electricity, gas and heat: The Belgian Council of Ministers approved another draft Royal decree which provides for a temporary reduction of the VAT rate for the supply of electricity, gas and heat through heat networks for residential contacts. More specifically, this draft Royal decree will:
  1. extend the application of the 6% VAT rate for the supply of electricity until 30 September 2022. This measure was initially introduced for the period between 1 March and 30 June 2022, as we reported earlier here;
  2. temporarily reduce the VAT rate from 21% to 6% for the supply of natural gas and heat through heating networks in the period between 1 April until 30 September 2022; and
  3. facilitate a monthly refund of VAT-credit for VAT taxable persons whose economic activity consists of supplying natural gas and heat via heating networks to households benefiting from the reduced VAT rate.
  • Solar panels and heat pumps: To stimulate the generation of solar energy, the Belgian Council of Ministers decided to reduce the applicable VAT rate for solar panels to 6% in the period of 2022-2023. The VAT rate will also be reduced to 6% for heat pumps and solar water heaters in the same period.
  • Demolition and reconstruction: The decision is made to extend the application of the 6% VAT rate in the context of demolition and reconstruction until the end of 2023. This temporary measure is currently applicable until 31 December 2022, as we reported earlier here.

The details of the new measures are yet to be published. We are monitoring the developments and keep you informed about relevant evolutions. In the meanwhile, if you have any questions, do not hesitate to contact us.

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Jeroen Gobbin
Partner

Indirect Tax
Brussels

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