VAT in construction: here's what it's like

What is covered by 9% VAT in construction?

In the construction sector, the 21% VAT rate usually applies. The reduced rate is intended for specific types of work; it does not apply to maintenance or renovation in general. For a property more than two years old, the 9% rate may apply to:

• Painting and wallpapering
• Plastering
• Insulating floors, roofs and facades
• The services associated with these activities, within the conditions per type of work

The age is calculated from the date the property was first occupied as a dwelling. If in doubt, check the BAG or ask the client to sign a written declaration. In the case of construction in phases, at least 50% of the property must consist of parts that are more than two years old.

When does the residential tariff not apply?

Offices, shops and holiday homes that may not be permanently occupied do not count as a home for this scheme. A second home that may be permanently occupied can be covered by it. Check the housing and age conditions.

What is covered by 21% VAT in construction?

Unfortunately, not all construction work is eligible for the reduced VAT rate. In fact, some jobs are subject to the standard VAT rate of 21%. These include:

• New building projects
• Architectural costs and structural calculations
• Garden landscaping and paving
• Supply and installation of kitchens and bathrooms
• Sale of loose building materials

VAT on labour

VAT on labour depends entirely on the type of work and the situation. Here is a handy overview of common jobs and the corresponding VAT rates.

VAT rate for painting and wallpapering

For homes older than two years, you only pay 9% VAT on painting and wallpapering. This also applies to the associated preparatory work. For painting, the materials used fall under 9%. For wallpapering, the labour and, for example, the paste fall under 9%, but the supply of the wallpaper itself falls under 21%.

For example: painting existing window frames may fall under 9%, but replacing window frames falls under 21%. Hanging wallpaper may be classified as 9%, whilst the supply of the wallpaper itself remains under 21%. The housing and other conditions continue to apply.

VAT rate for plasterers

Plastering on homes older than two years falls under the 9% VAT rate. For new buildings, the standard rate is 21%.

VAT rate for floors and tilers

Laying floors and fitting tiles generally fall under 21% VAT. For energy-saving floor insulation in a home older than two years, only the insulation labour may qualify for 9%; the insulation materials remain subject to 21%. Adding insulation therefore does not automatically make the whole flooring job subject to 9%.

VAT on building materials

VAT on materials depends on the type of work:

• For painting, plastering and wallpapering work on homes older than two years, the materials used (paint, plaster and wallpaper paste) can also fall under the 9% rate, provided they form part of the service.

• For insulation work on homes older than two years, the labour for energy-saving insulation falls under 9% VAT, but the insulation materials themselves fall under 21%.

• Do you sell loose construction materials, without assembling them yourself? Then 21% VAT always applies, even if the materials are intended for a home older than 2 years.

Applying multiple VAT rates in one order

Sometimes a mix of VAT rates applies within one job. For example, consider a renovation company that does both painting (9%) as the installation of a new kitchen (21%) does. Break down the items in the quotation and then on the invoice. Example: €1,000 for painting work and associated materials under code 9% and €3,000 for kitchen fitting under code 21% results in €90 + €630 = €720 VAT. The total including VAT is €4,720. This example assumes a property older than two years and no reverse-charge mechanism.

Read how to process the amounts in your VAT return.

VAT shifted on construction materials and hours?

The scale of a project does not determine whether you reverse-charge VAT. For physical work on immovable property involving subcontractors, reverse-charging to the main contractor generally applies. Working directly for a private homeowner does not fall under this. There are exceptions, for example when you carry out more than half of the work in your own workshop. View the subcontracting conditions.

In the case of reverse charge, you must not state a VAT amount on the invoice, but instead indicate “VAT reverse charged” and the customer’s VAT registration number. This is not a 0% rate. A single supply of building materials does not automatically fall under this scheme.

Check out our explanation of VAT reverse charge and the invoicing requirements.

What to pay extra attention to with VAT in the construction industry

• Always check which VAT rates apply to which work, as it saves surprises.
• Check both the type of work and the use and age of the property.
• Clearly state on the invoice which jobs fall under 9% and which under 21% VAT.
• With VAT reverse charge, make the invoice without VAT, but don't forget to mention the scheme.

Mixed-use residential and commercial properties

Are you working on a mixed-use property or a residential property with commercial premises? To qualify for the reduced residential rate, you need to consider both the residential part and the type of work. Set out the breakdown of the work. The residential part is not automatically classified as 9% for every job.

Cleaning a property

Routine cleaning inside a home falls under 9% VAT, even if the home is less than two years old. Exterior cleaning and certain specialist cleaning services fall under 21%.

Check the rule for your activities

The Tax and Customs Administration explains the conditions separately for painting, plastering, wallpapering and insulation. Also read how to record business journeys to your construction projects in your accounts.

Frequently Asked Questions