Renting to a non-profit in Belgium: lease, VAT and taxation

The specificities of renting to a non-profit

Renting to a non-profit (ASBL/VZW) is a common situation in Belgium: association offices, premises for social activities, housing for social workers or shelters. But this rental follows specific rules that the landlord must know.

The main differences from renting to a private individual:

• The lease type depends on the actual use of the property, not the tenant’s status
• VAT may apply under certain conditions (new buildings)
• Landlord taxation changes: taxation is on the actual rent, not the cadastral income
• The rental deposit follows the rules of the applicable lease type

To draft a lease suited to a non-profit, use our lease generator and select the lease type corresponding to the intended use.

The applicable lease type

The applicable lease depends on the non-profit’s use of the property, not its legal status.

Common law lease

This is the most common lease for non-profits. It applies when the property is used as:

• Registered office or administrative office
• Premises for associative activities (meetings, training)
• Warehouse or storage space

Characteristics: almost total contractual freedom, no minimum duration imposed, no automatic renewal. The landlord and non-profit freely negotiate the terms.

Commercial lease

Applies if the non-profit carries out a commercial activity open to the public on the premises:

• Charity shop, second-hand boutique
• Social restaurant or canteen
• Paid entertainment venue

Characteristics: minimum 9-year duration, right of renewal, eviction compensation. The commercial lease is more protective for the tenant.

Main residence lease

Applies only if a member of the non-profit actually lives in the property (e.g.: caretaker’s accommodation, shelter with resident staff). In this case, the regional main residence lease applies in full.

The VAT regime: when to opt for VAT

The principle: VAT exemption

As a general rule, property rental is VAT-exempt in Belgium. The landlord does not charge VAT on the rent and cannot deduct VAT on investments.

The VAT option (since 2019)

Since 1 January 2019, the landlord can opt for the application of VAT (21%) if two conditions are met:

1. The property is new: built or fundamentally renovated after 1 October 2018
2. The tenant uses the property for an activity subject to VAT (even partially)

The specific case of non-profits

If the non-profit carries out only VAT-exempt activities (education, healthcare, social welfare), the VAT option is not possible. If the non-profit has a mixed regime (liable and exempt activities), the option is possible pro rata for the liable activities.

Points of attention for the landlord

Check financial strength

Before signing, consult the non-profit’s annual accounts filed with the National Bank of Belgium (free on the NBB website). Elements to check:

• Positive equity
• Sufficient cash to cover 6 months’ rent
• Sources of funding (public subsidies = more stable, donations = more volatile)
• Activity history (recent non-profit = higher risk)

Strengthen the rental deposit

A common law lease does not cap the rental deposit amount. You can request 3, 6 or even 12 months’ rent as a deposit. In practice, 3 to 6 months is the norm for non-profits.

Essential lease clauses

Include in the lease:

• Authorised use: specify the exact use of the property to avoid unwanted changes
• Solidarity clause: if several people sign on behalf of the non-profit, provide for joint liability
• Detailed property inventory: an adversarial inventory is essential
• Express termination clause: in case of unpaid rent (2 months, for example)

Landlord taxation

Reminder: the landlord (natural person) renting to a non-profit is taxed on the actual rent (net of service charges), not on the cadastral income. Specifically, if the revalued cadastral income is 6,000 EUR and the actual rent is 12,000 EUR, taxation is on 12,000 EUR. Actual costs (works, insurance, loan interest) are deductible at a flat rate of 40% (capped at cadastral income x 2/3).

To manage rental to a non-profit and track payments, use our rental management platform.

Conclusion: a profitable rental under the right conditions

Renting to a non-profit can be an excellent arrangement if the landlord takes the necessary precautions: check financial strength, choose the right lease type and anticipate the tax impact.

Key points to remember:

1. The lease type depends on the property use, not the non-profit’s status
2. The VAT option is available for new properties with a VAT-registered tenant
3. Taxation is on the actual rent, not the cadastral income
4. The rental deposit is not capped under common law leases
5. Annual accounts of the non-profit are freely consultable

To draft a lease suited to your situation, use our lease generator and discover our rental management tools.