Belgium: FAQ on VAT treatment of furnished accommodations

Amended scope of the exception to the VAT exemption for the provision of furnished accommodations

Amended scope of the exception to the VAT exemption

The tax authority 15 June 2022 published a new frequently asked question (FAQ) providing guidance on the amended scope of the exception to the value added tax (VAT) exemption—effective from 1 July 2022—for the provision of furnished accommodations. 

Background

The renting of immovable property is generally exempt from VAT under Article 44, §3, 2o of the Belgian VAT Act. An exception to this rule applies to the provision of furnished accommodations in hotels, motels and similar establishments.

In order to be able to clearly distinguish between VAT-taxable and VAT-exempt provision of such accommodations, the VAT exemption was amended in December 2021, effective 1 July 2022. Read TaxNewsFlash

Under the amendment, the provision of furnished accommodations is VAT-taxable when such accommodations are provided for a period of less than three months in hotels and motels, as well as similar establishments that commonly provide such accommodations for a period of less than three months, unless such establishments do not provide any of the following closely related services: reception, weekly renewal of bed linen, or daily breakfast. 

FAQ

The FAQ specifically provides the following guidance:

  • Criterion of three months: The provision of furnished accommodations by hotels, motels and similar establishments can only be VAT-taxable if the period of stay is shorter than three months. However, the provision of furnished accommodations for less than three months by establishments with a similar function as hotels and motels can only be VAT-taxable if the establishment also meets the qualitative criterion of “related services.” The provision of furnished accommodations longer than three months is always VAT-exempt, and the provision of unfurnished accommodations also remains VAT-exempt, regardless of the rental period. 
  • Related services: The provision of furnished accommodations for a period of less than three months by establishments with a similar function as hotels and motels is only exempt when they provide at least one “related service”—reception, weekly renewal of bed linen, or daily breakfast. It is not relevant whether the related services are included in the total price of the accommodation or charged separately.
  • Effective date: In general, the new rules apply with respect to VAT chargeable from 1 July 2022 (typically, date of payment or invoice). However, as an administrative tolerance, the tax authority will only apply the new rules to the provision of furnished accommodations booked from 1 July 2022.
  • Other aspects: The FAQ includes further clarifications, including examples, regarding the calculation of the three month period and the interpretation of “related services.” 

The tax authority also published an FAQ providing guidance on the temporary application of the reduced VAT rate of 6% for solar panels, heat pumps and solar water heaters. Read TaxNewsFlash

Read a June 2022 report prepared by the KPMG member firm in Belgium

 

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