VAT on the lease of real estate in a B2B context

We reported earlier that since 1 January 2019, it has become possible to submit the lease of real estate in a B2B context to VAT.

But we were still waiting though for clear formalities for exercising this option.

A recent Royal Decree introduced Article 7quater to the Royal Decree nr 10 of 29 December 1992 with respect to the conditions of exercise of the option in the VAT Code.

1. What conditions of exercise?

Pursuant to the new Article 7quater of Royal Decree nr. 10, real estate lease can be subject to VAT if the tenant and landlord express their intention in a declaration at the latest at the time the lease agreement enters into force.

This declaration must at least contain the following information:

• the name or corporate name, address and VAT number of the tenant and the landlord;
• the identification of the building or part of the building, possibly including the land, that is leased;
• the expressed intention of the parties to submit the lease to VAT;
• the date on which the option enters into force.

In order to avoid excessive formalities, this information must not necessarily be contained in a separate declaration. The declaration may also be contained in the lease agreement itself.

No additional declaration must be made if the lease agreement is subject to VAT and is tacitly renewed.

2. When do these formalities enter into force?

The new Article 7quater of Royal Decree nr. 10 enters into force retroactively as of 1 January 2019.

If the lease agreement has been executed prior to the entry into force of the Royal Decree and the parties had the intention to submit the lease to VAT, it is still possible to exercise the option. To this effect the parties must make a declaration at the latest on 29 February 2020 (or enter into an addendum containing the aforementioned information).

Please do not hesitate to contact us should you have any question regarding VAT on lease or the exercise of the option (+32 (0)2 747 40 07 or info@seeds.law).