On February 13, 2013, the Dutch government concluded the Housing Market Agreement (woonakkoord). One of the measures in this agreement concerns a reduced VAT rate of 6% as of March 1, 2013 for the renovation and repair of existing homes. The exact conditions for the application of this VAT rate were announced by Decree dated February 28, 2013. This Decree also includes a number of specific approvals.
The Decree at a glance
· The reduced rate applies during the period from March 1, 2013 to March 1, 2014.
· The reduced rate only applies to existing homes, i.e. those that were first occupied more than two years ago.
· The definition of a home is quite broad in this case. For example, houseboats are included subject to certain conditions. Nursing homes and care homes may also invoke the Decree.
· The reduced rate also applies if the renovation and/or repair work has already commenced, as long as such activities will be completed after March 1, 2013. The scheme therefore covers work paid for by means of installments made prior to March 1, 2013. As the scheme only relates to the period up until March 1, 2014, the work must have been completed before that date.
· The reduced rate only applies to labor costs and not to materials. The Decree includes specific rules that distinguish and separate these individual components.
· The scheme not only applies to individuals, but also, for example, to housing associations.
· Subject to certain conditions, the reduced rate also applies to services provided by architects and gardeners.