Imposition of VAT on land transactions for business purposesnconstantinou
On the 3rd of November 2017 the House of Representatives voted the imposition of VAT at 19% on land transactions for business purposes.
VAT will be charged on the following transactions:
• The transfer of undeveloped buildable land which is intended for the construction of one or more fixed structures in the course of the economic activities of the transferor/seller. The status of the transferor/seller depends on the facts of each individual case. Occasional sales should be exempt from VAT where there is no other evidence indicating an intention to be engaged in an economic activity and the transaction does not distort the fiscal neutrality of other sellers making similar supplies.
• The leasing and/or letting of immovable property to a taxable person for the purposes of making taxable activities except for the leasing of a building used for private dwellings.
The lessor has the right to choose not to tax the above transaction under certain conditions provided he notifies the Tax Commissioner accordingly.
In addition, the Law provides that VAT must be accounted for in relation to transactions involving the transfer of buildings (before the first occupation) and land from the borrower to the lender under a loan reorganization or forced transfer procedure. In these cases, the recipient of the property is required to account for VAT under the reverse charge provisions provided that he is a taxable person and the property is received and used for business purposes.
The Law comes into effect as from 2 January 2018 except for the provisions regarding the leasing and/or renting of immovable property which comes into effect from 3 November 2017.