Immovable property
Real estate labeled for business purposes
If an entrepreneur has labeled a property completely for business use, but occupies part of the property himself or uses it for non-business purposes in some other way, a correction must be made. In this case, the correction is made by allowing the deduction of the VAT on the cost of the property only insofar as the property is used for business purposes. The ratio between business and private use is determined on the basis of actual use. Of course, after this correction, the private use of the property is no longer a fictitious supply (see section Fictitious supplies. The VAT due on deemed supplies).
The deducted VAT must be revised in the nine years following the date of putting into first use if the ratio between business and private use changes, unless the VAT due as a result of this deviation is less than 10 percent of the originally deducted VAT.
The following periods should be distinguished for the purposes of VAT adjustment and revisions:
1. The period in which the VAT on the fully business-labeled premises has been charged to the entrepreneur
The VAT may be deducted in proportion to the expected business use;
2. The period in which the premises are first put into use
The deducted VAT is adjusted based on the actual ratio between business and private use at the time the property is taken into first use. Obviously, 1 and 2 coincide, if the property is put into use immediately after purchase;
3. The last period of the financial year in which the building was put into first use.
The deducted VAT is revised on the basis of the actual ratio between business and private use during the (part of) the first year of use;
4. The last period of the financial year in the nine years following the year of putting into first use
One tenth of the VAT deducted shall be adjusted on the basis of the actual proportion of business to private use during the financial year;
5. The period in which the property is sold, if the sale takes place within nine years of the year it was put into first use
The deduction will be revised in one go for the remaining period in which the correction of 4) has not yet taken place. In short, the use will be considered as 100 percent business if VAT was (correctly) charged at the time of the supply, and as 100 percent private if no VAT was charged.
