If you carry out work on a building for a business client, you may not need to charge VAT at all, instead, your client reports and deducts it themselves. This is called the VAT co-contractor scheme (in Dutch: btw-medecontractant; in French: cocontractant TVA), and it's mandatory whenever the conditions are met. Here's everything you need to know.
At a glance:
✅ Applies to work on real estate, between two VAT-registered parties (subject to VAT), for professional use
✅ The contractor charges 0% VAT, the client self-assesses and deducts it (a "zero-sum" operation)
✅ Mandatory, not optional, whenever the conditions are met
🏗️ In a subcontracting chain, only the status of your direct client matters, not the final building's use
🚫 Can't be combined with the reduced 6% VAT rate
📜 Requires a specific legal statement on the invoice
💡 What is the VAT co-contractor scheme?
Normally, if you're VAT-registered in Belgium, you charge VAT on your invoices and your client recovers it (if they're entitled to) through their own VAT return.
For work on real estate, the law skips that back-and-forth. The contractor doesn't charge VAT at all. Instead, the client (the "co-contractor") reports the VAT due directly on their own periodic VAT return and in the same return, deducts it again if they're entitled to. Since both entries happen in the same return, this is usually a zero-sum operation: no VAT actually changes hands.
This is also known as the reverse charge for work on real estate.
It's not optional if the conditions below are met, you're required to apply it.
✅ When does the scheme apply? Three conditions
All three of the following must be true for the reverse charge to apply:
The work qualifies as "work on real estate".
→ See the next section for what counts.
The building is used for professional purposes, in whole or in part.
→ A company building qualifies, but so does a private home that's partly used as an office or shop.
Except in a subcontracting chain. Here only the status of your direct client matters, not the final building's use
Both you and your client are subject to VAT and file periodic VAT returns.
→ If your client is exempt (e.g. under the small business exemption scheme, or a private individual), the reverse charge doesn't apply. You invoice with standard VAT instead.
ℹ️ The scheme applies regardless of what the client uses the reverse-charged VAT for as long as they're a taxable person who files periodic returns.
It only stops applying if the building is used exclusively for the private purposes of a VAT-registered individual.
🧱 What counts as "work on real estate"?
The legal term covers building, converting, finishing, fitting out, repairing, maintaining, cleaning, or demolishing something that is by nature immovable, plus supplying and fitting a movable item in a way that makes it immovable (e.g. a built-in kitchen).
Usually covered
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Not covered
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Roof, façade, or floor covering installation
Painting work
Extensions and construction work
Sanitary installations fixed to the building (heat pump, A/C, EV charging station)
Electrical work
Renovation, repair and maintenance of a building
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Devices not fixed to the building or the ground (e.g. a washing machine, a lamp, a printer)
Simply supplying goods without installing them
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If you're not sure whether a specific job qualifies, your tax coach can help you check.
🚫 The 6% VAT rate and the co-contractor scheme don't mix
If the work qualifies for the reduced 6% VAT rate (renovation of a private home older than 10 years), you cannot also reverse charge the VAT. The two regimes are mutually exclusive, reverse charge only applies at the standard 21% rate on professional-use real estate.
Want the full breakdown of when the 6% rate applies? Check the article on correctly applying the 6% VAT rate for contractors.
🏠 Mixed-use buildings: splitting the invoice
If a building is used partly for professional purposes and partly for private purposes, you can still apply the co-contractor scheme, but only to the professional part. You'll need to split the invoice into two:
The professional part → invoiced with 0% VAT under the co-contractor scheme.
The private part → invoiced with standard VAT, as usual.
Example 1: 100% professional use
A painter repaints an office used exclusively for a self-employed activity. Total cost: €10,000. The painter invoices the full €10,000 with 0% VAT under the co-contractor scheme. The client self-assesses and immediately deducts the VAT on their own return, a zero-sum operation, with no VAT prefinancing needed.
Example 2: mixed use (25% professional / 75% private)
The same painter also repaints the rest of the house. Of the €10,000 total, €2,500 relates to the office and €7,500 to the private living space.
€2,500 → invoiced under the co-contractor scheme (0% VAT, client self-assesses)
€7,500 + 21% VAT = €9,075 → invoiced normally for the private part. This VAT cannot be recovered.
🏗️ Subcontracting chains: what if you're not invoicing the end client?
A common source of confusion: what if you're a subcontractor, and the company you invoice isn't the one actually using the building, they're reselling the work as part of their own contract with a private homeowner?
The rule to remember: at each link in the chain, what matters is the status of the person you're directly invoicing, not what the building will ultimately be used for. If your direct client is a company subject to VAT that files periodic returns, the reverse charge applies to your invoice to them, in full, regardless of who their own client is or what the property is used for down the chain.
Example 3: subcontracting to a company, for a fully private end client
Company A is renovating a private home (100% private use) for a homeowner. You (Company B) are subcontracted by Company A to paint the house.
You → Company A: you invoice Company A with 0% VAT under the co-contractor scheme (+ the mandatory legal statement). This is because Company A is a VAT-registered company filing periodic returns, and it's receiving your service as part of its own professional activity, it doesn't matter that the house itself is 100% private, since Company A isn't the end user of the building.
Company A → the homeowner: Company A charges standard VAT (21%, or 6% if the reduced-rate conditions are met) on its own invoice to the homeowner, since the homeowner is a private individual who doesn't file periodic VAT returns.
Example 4: subcontracting to a company, for a mixed-use end client (50% professional / 50% private)
Same setup, but this time the homeowner uses 50% of the house for their own VAT-registered professional activity.
You → Company A: no change, you still invoice Company A with 0% VAT under the co-contractor scheme, in full. The 50/50 split at the homeowner's level doesn't affect your invoice to Company A.
Company A → the homeowner: Company A needs to split its own invoice, but only if the homeowner is themselves a VAT-taxable person filing periodic returns for that professional use:
Professional 50% → co-contractor scheme applies (0% VAT, homeowner self-assesses)
Private 50% → standard VAT applies (21%, or 6% if eligible)
→ If the homeowner's "professional use" doesn't come with periodic VAT filing (e.g. it's a home office for salaried work, or an exempt activity), the reverse charge condition isn't met for that part either. Company A would charge VAT on the whole invoice instead.
💡 Rule of thumb: as a subcontractor, you never need to know or worry about what happens further down the chain. Just check the VAT status of the party you're invoicing directly, that's what determines your own invoice.
📜 The mandatory invoice statement
Since a change to the rules that took effect on 1 January 2023, a short legal statement used to be enough on a co-contractor invoice ("VAT reverse charged under art. 20 of Royal Decree no. 1"). That's no longer sufficient, you're now required to include a more detailed statement:
"Self-assessment: In the absence of a written objection, within one month of receipt of the invoice, the customer is presumed to acknowledge that he is a taxable person required to file periodic returns. If this condition is not met, the customer will assume, in relation to this condition, responsibility for the payment of the tax, interest and fines due. (AR 26.10.2022, MB 10.11.2022, ed. 2, 10.11.2022, art. 13)." |
The point of this wording: your client has one month to dispute, in writing, that they're a taxable person filing periodic returns. If they don't, they're presumed to confirm it, and if that turns out to be wrong, they (not you) become liable for the unpaid VAT, interest, and fines.
For the full list of legal notes for every 0%-VAT scenario, see this article.
⚖️ Who actually benefits?
For you as the contractor, invoicing under the co-contractor scheme has no direct advantage, you don't charge VAT, don't collect it, and don't remit it.
The advantage is for your client: they don't have to prefinance VAT and wait to recover it in their next return. That's a meaningful cash flow benefit, especially for a client who's just starting out.
🌍 Working with foreign contractors or clients
Since 1 January 2023, the rules were also widened: a foreign business with a direct Belgian VAT registration (even without a Belgian fiscal representative) can now also be involved on either side of a co-contractor transaction, as long as it files Belgian periodic VAT returns. Before that date, a fiscal representative was required for this to apply.
⚠️ What happens if it's applied incorrectly?
You charge VAT when you should have reverse charged it:
→ Your client generally can't deduct that VAT (the invoice is irregular), and you may still be asked to remit it, with interest and penalties.
You reverse charge when you shouldn't have:
→ You (the contractor) can be asked to pay the VAT you should have charged, plus interest and fines, since none was invoiced.
This is exactly why the mandatory invoice statement matters: it shifts responsibility for the "am I really a periodic-return filer" question onto your client, provided you've included the correct wording and there's no written dispute within the month.
👉 How to apply this in Accountable
You don't need to know the legal rules by heart. In Accountable:
For a sales invoice:
→ Select 0% VAT and choose "Co-contractor reverse charge" as the reason. We'll automatically add the required legal statement to your invoice.
For a purchase invoice (expense) you received under the reverse charge mechanism:
→ Select 0% VAT and choose "Co-contractor reverse charge" as the reason. We'll categorize the expense correctly and automatically include it in your VAT return.
Not sure whether a specific job of yours qualifies, especially with subcontracting chains or mixed-use buildings? That's exactly the kind of question to bring to your tax coach. Reach out any time via chat 😊