VAT adjustment scheme for real estate investment services

18/09/24

As of 1 January 2026, a VAT adjustment scheme will come into effect for so-called real estate investment services with a fee of at least 30,000 euros excluding VAT. These include services such as maintenance and renovations. VAT-registered businesses with real estate will need to record and monitor the use of such services in their VAT administration and, if necessary, make adjustments to the initially deducted VAT on these services. We expect that this measure will increase the administrative burden for businesses and that this alone will already have a significant impact on practice.

What does this mean for your business?

This new measure affects every VAT-registered business that owns real estate and has real estate investment services performed with a value of at least 30,000 euros per service.

There will be an adjustment period of effectively five financial years, starting in the financial year in which the service is first used. During this period, the business must closely monitor and record the use of the real estate. If there are any changes in this use, the business should adjust the initially deducted VAT on the service. We expect this measure in practice will increase the administrative burden for all businesses, regardless of the outcome.

If you plan to have services performed attributable to your real estate, your PwC advisor can help you determine the necessary actions to comply with these new measures.

Adjustment scheme real estate investment services

The core of the measure is the introduction of an adjustment scheme that requires the initially deducted VAT on certain services related to real estate (so-called 'real estate investment services') to be adjusted when the use of the relevant real estate for activities for which a right of deduction exists changes. The use of the real estate must be monitored and recorded during the so-called 'adjustment period'. The proposal is that the adjustment period will last five financial years (including the year of first use). The proposal for the new law states that the scheme applies if the fee for the real estate investment service is at least 30,000 euros excluding VAT.

If a business uses the relevant real estate more for activities that do not entitle it to deduct VAT during the adjustment period than it anticipated when purchasing the services, it will have to repay part of the initially deducted VAT. Conversely, if the business uses the real estate more for activities that do entitle it to deduct VAT, it will receive part of the VAT back. This means that the business will need to monitor and record the use of the real estate.

The adjustment scheme will apply to services such as renewing, enlarging, repairing or replacing, and maintaining real estate, including demolition work related to renovations. Specific examples include: painting window frames and doors inside or outside, soil or asbestos remediation, installing kitchens and bathrooms, insulation, and facade or roof renovation services that will serve a property for multiple years. The processing of materials, installations, machines, and tools that become part of the service and lose their independence after installation or assembly also fall within the scope of the scheme.

The measure takes effect on 1 January 2026 and applies to all services first used on or after that date. The moment of first use of the investment service will usually coincide with the completion of the service.

We note that a second online consultation is currently being held regarding the practical implementation of this scheme.