VAT rate for work on mixed-use buildings changed from 1 July 2025

Until 1 July 2025 the 9% rate could be applied to a whole mixed-use building where more than half of it was in private residential use. Since that date the reduced rate applies only to the residential part.

Dutch policy before 1 July 2025

Insulating, painting, plastering, wallpapering and cleaning dwellings more than two years old is subject to 9% VAT. Until 1 July 2025 a mixed-use building, that is a building partly used as a dwelling such as a shop with a flat above, a home for the elderly or a care home, could be treated entirely as a dwelling where more than 50% of it was in private residential use. The 9% rate could then be applied to work on the whole building, provided it was more than two years old. Where residential use was below 50%, the work had to be split.

New rules from 1 July 2025

In HPA Construções of 11 January 2024, the Court of Justice held in short that the VAT Directive does not preclude a reduced rate for repair and renovation services on private dwellings, provided the dwellings concerned are actually used for residential purposes at the time those services are supplied.

The State Secretary for Finance concluded from that judgment that Dutch policy was too generous. The non-residential part cannot be said to be actually used for residential purposes. Policy was therefore tightened with effect from 1 July 2025:

• the 9% rate may only be applied to work on the residential part
• work on rooms with a function other than private residence, such as a meeting room or recreation room, is subject to 21%
• work on mixed-use common areas and facilities, such as stairwells, lifts and entrances, is subject to 9% in proportion to the part of the building intended for private residence and 21% in proportion to the part intended for other purposes

What this means in practice

Businesses carrying out work to which the reduced rate applies in whole or in part are themselves responsible for applying the correct rate and paying the VAT due. For mixed-use buildings it is therefore important to record not only the age of the building but also the use of each of its rooms.

Do this at the quotation stage. That way you not only pay over the right amount, but also build it correctly into the price quoted. Anyone insulating, painting, plastering, wallpapering or cleaning dwellings should adjust the VAT treatment in their records and invoicing accordingly.