New coalition agreement includes reduced VAT rate changes
A new federal Belgian government has been formed with five parties striking a ‘Federal Coalition Agreement 2025-2029’, dubbed the “Arizona deal”.
Within the agreement struck on 31 January 2025 are a number of VAT rate changes reflecting the progressive, environmental policies of the new government:
- The VAT rate on heat pumps will reduce from 21% to 6% for five years.
- The VAT for the supply and installation of an internal combustion boiler on fossil fuels (gas, fuel oil, etc.) will be increased from 6% to 21% in the context of a renovation (for homes older than 10 years).
- VAT on coal will rise from 12% to the standard 21% rate.
- Introduction of flat-rate VAT for company bicycles.
- An extension to the 6% VAT rate on demolition of building.
- Expansion of the VAT donations rules to encourage businesses to contribute goods to good causes the loss of the right to deduct any input VAT on the goods. This includes more flexible rules on age of goods qualifying and allowing more goods to be included in the scheme.
These measures reflect the coalition’s commitment to a greener future, framing Belgium’s path to achieving climate neutrality by 2050.
There was also confirmation of Belgian 2028 real-time reporting which will support the 2026 e-invoicing mandate.
Read more in our Belgian VAT guide.