General 2

Question 1

Does VAT apply when a person is selling their place of residence?

Answer 1

No.

VAT applies only to “transactions carried out in the furtherance of business”

Question 2

Capital Goods

Answer 2

Immovable developed goods (e.g. developed property)

Question 3

When might a development (construction, demolition, alteration) to a property be considered minor?

(Two circumstances)

Answer 3

When the development doesn’t adapt the property for “materially altered use”

Or

The cost is <25% the property value

Question 4

When does property count as “new”?

Answer 4

For 5 years following completion

- Or 2 years after the end of the first occupancy if resold within 5 years

Question 5

Joint Option for Taxation

Answer 5

Vendor and purchaser agreeing to have VAT (at 13.5%) charged on an otherwise exempt supply of property

Purchaser accounts for VAT through a reverse charge

Question 6

When is (13.5%) VAT applicable on the supply of developed property?

Answer 6

If:

• New
• Has undergone a major development
• For supply for consideration in the course of business

Question 7

VAT Life

Answer 7

The period in which a Capital Goods Scheme adjustment must be made (if required)

Usually 20 years from acquisition
- 10 years from completion of a redevelopment

Question 8

Legacy Lease

Answer 8

Longer than 10 years

Question 9

Capital Goods Scheme

Answer 9

Adjustments of VAT to a person who makes an exempt use or supply of property
- Does NOT apply if no VAT was charged on acquisition

Question 10

Dates/Timing of Capital Goods Scheme (CGS) Intervals:

• First
• Second
• Subsequent

Answer 10

First: The 1st year from purchase

Second: Beginning the end of the first interval and ending at the end of the owner’s usual accounting year

Subsequent: In line with the owner’s accounting year

Question 11

Big Swings (Capital Goods Scheme)

Answer 11

A full adjustment needed when the taxable use in an interval varies from the first interval use by >51%

Question 12

Treatment of the taxable sale of a Capital Good within its VAT life:

• If seller only used property for taxable activities in the first interval
• Otherwise

Answer 12

• If seller only taxable activities in the first interval: No adjustment
• Otherwise: Adjustment required to reimburse input VAT

Adjustment = Non-deductible VAT * (Number of full intervals remaining +1) / Total number of intervals

Question 13

Treatment of the VAT exempt sale of a Capital Good within its VAT life:

• If seller wasn’t entitled to deduct input VAT
• Otherwise

Answer 13

• If seller wasn’t entitled to deduct input VAT: No adjustment
• Otherwise:
  Adjustment = (Total reviewed deductible amount * (Number of full intervals remaining +1)) / Total number of intervals in VAT life

Question 14

Total reviewed deductible amount

Answer 14

Based on real taxable use of a capital good

as opposed to the predicted or first interval usage

Question 15

Is VAT ever due on the transfer of a business?

Answer 15

No, not even if it includes property.