What VAT Rate is Applicable for Construction Companies?

Do you want to know the correct building VAT rate to consider for your construction sites and services? You should know that construction companies are subject not to one but several different VAT rates depending on the type of work, buildings or equipment in particular.

Thus, the rate you will have to apply may, depending on the case, fall under normal VAT, intermediate VAT or reduced VAT.

We explain everything about the applicable VAT for construction companies.

What is the standard rate of VAT for a building company?

The standard rate of VAT in force for construction companies is 20%. It applies by default to all construction or renovation work not eligible for the intermediate or reduced rate. It is therefore this rate that you must take into account when calculating your benefits when they consist of:

  • New house construction
  • Renovation carried out in premises for non-residential use
  • Layout, cleaning and maintenance of green spaces
  • The supply of household or furniture equipment
  • Installation and maintenance of elevators.

When is the intermediate VAT (10%) applied to building companies?

The intermediate VAT offers a reduction of -10% compared to the normal VAT rate. Its rate at 10% is exclusively intended for renovation, transformation, fitting-out and maintenance work for premises for residential use that have been completed for more than 2 years.

It also applies to labor and equipment purchased as part of work on renovation sites other than for energy improvement.

When is the intermediate VAT not applicable in the building?

Note that the 10% intermediate VAT on the building cannot be applied in several cases. It is not applicable for:

  • Green space development work
  • Construction, reconstruction or cleaning work
  • The purchase of supplies of certain large equipment
  • Social rental housing
  • Premises for commercial, industrial, administrative or agricultural use
  • Premises managed by a non-profit organization that does not fall under the type of residential use.

What is the building VAT on accommodation by type of building?

It is above all necessary to distinguish according to whether you are dealing either with an apartment or individual house, or with common areas of an apartment building.

For apartments or single-family houses, the intermediate rate will be applied by the company for premises totally dedicated to housing and its outbuildings.

On the other hand, if you are dealing with an apartment building, the intermediate 10% VAT rate will apply for:

  • The premises assigned to housing.
  • The premises are 50% partially dedicated to residential use.

Under what conditions can a building company benefit from a reduced VAT of 5.5%?

Your business can benefit from the reduced rate of 5.5% for renovation work aimed at improving energy efficiency. It must imperatively be housing for residential use completed for more than 2 years. Finally, the services eligible for reduced VAT must be carried out by an RGE craftsman.

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