- VAT on service charges will be implemented starting January 1, 2025
- Thijs Bijlard, a tax director and VAT specialist, discusses updates to the VAT real estate decision made in December 2023
- Until December 31, 2024, the treatment of service charges in commercial real estate and residential rentals varies
- In commercial real estate, service charges are often considered separate taxable supplies and are subject to VAT
- For residential rentals, service charges are usually part of the VAT-exempt rental service
- From January 1, 2025, the distinction between commercial and residential service charges will no longer matter
- The focus will be on whether service charges are independent services or incidental to the rental service
- The terms of the lease agreement will play a crucial role in this determination
- If service charges are independent, they are usually subject to VAT
- This applies when tenants can choose their service provider or have individual meters to measure actual consumption of utilities like gas, water, and electricity
- If service charges are incidental to the rental, they follow the VAT status of the rental itself, either taxed or exempt depending on the rental’s VAT status
Source: vanoers.nl
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
