The government proposes to eliminate the reduced VAT rate for ornamental plants and hot-air balloon rides effective January 1, 2028. With this measure, the government aims to make the VAT system simpler and more consistent.
On Prinsjesdag, a proposal was made to end two specific applications of the reduced VAT rate. Starting January 1, 2028, the general VAT rate of 21% will apply to ornamental plants and hot-air balloon rides instead of the current reduced rate of 9%.
Ornamental horticulture: from 9% to 21%
As of January 1, 2028, the separate category for ornamental horticultural products within the reduced VAT rate will be eliminated. As a result, supplies of (among other things) flowers, plants, flower bulbs, and tree nursery products will henceforth be taxed at 21%. The government cites its desire to simplify the VAT system: the fewer exceptions to the general rate, the easier it is for businesses and the Tax Authority to apply the rules. Discussions regarding composite transactions—such as floral arrangements that include pots, ribbons, or other decorations—are also expected to decrease as a result.
This measure could lead to higher prices for consumers. If the VAT increase is fully passed on, the consumer price will rise by approximately 11%. The structural budgetary revenue is estimated at approximately €305 million per year. At the same time, the government acknowledges that the measure may have consequences for the floriculture sector, particularly for florists and garden centers that focus on the domestic consumer market.
Hot-air balloon rides: a recreational experience, no reduced rate
The reducedVAT rate for hot-airballoon rideswill also expire as of January 1, 2028. Hot-air balloon rides are currently still subject to the reduced rate for certain forms of passenger transportation. The government no longer considers this appropriate, as a hot-air balloon ride is generally not focused on transportation from point A to point B, but on the experience itself. Therefore, starting in 2028, 21% VAT will be due.
Transitional provisions for prepayments and vouchers
The bill includes transitional provisions for hot-air balloon rides. In this context, it is not the time of payment that is decisive, but the time when the hot-air balloon ride actually takes place. For example, if a hot-air balloon ride is prepaid in 2027 but does not take place until 2028, the general VAT rate of 21% still applies. This also applies to single-use vouchers: if the voucher relates to a hot-air balloon ride taking place on or after January 1, 2028, the rate in effect at that time will apply. In this way, the government aims to prevent the old 9% rate from continuing to apply for an extended period due to advance payments or vouchers.
Home Batteries: No 0% Rate for Now
It is also noteworthy that no zero VAT rate for home batteries has been proposed at this time. Therefore, VAT is generally charged when purchasing a home battery. Under certain conditions, however, that VAT may be deductible, for example, when the home battery is used for VAT-taxable activities such as feeding electricity back into the grid or trading in electricity. Whether a deduction is possible depends on the specific situation and the use of the battery.
What does this mean for you?
Business owners in the ornamental horticulture sector and providers of hot-air balloon rides would be wise to review their prices, point-of-sale systems, quotes, terms and conditions, and voucher records well in advance. Do you have questions about the implications of these VAT changes or about the VAT treatment of home batteries? Please feel free to contact your personal representative at Govers, use the contact form on our website, or call our general phone number at 040 – 2 504 504.