VAT and real estate

The topic of real estate is particularly interesting in the area of VAT because the legal situation offers various opportunities for optimization. Careful and professional planning can positively influence and increase the return on a property.

The following aspects are of particular interest from a VAT perspective:

• Avoidance of "taxe occulte"
• Various transfer options when selling/acquiring a property

Avoiding “taxe occulte” basically means that the VAT incurred on the property costs (e.g. invoices from tradesmen) can be claimed as input tax. This can be achieved by using the property for business activities yourself or by opting for the rental/sale of a property. “Option” means that a payment is voluntarily subject to VAT. The first reflex “I'm not going to voluntarily register for VAT and also voluntarily pay VAT on the rent or sale of my property” is often too short-sighted from a business management perspective, as financial benefits can be achieved through voluntary registration or voluntary taxation of various services.

The option is also one of basically three (VAT) transfer possibilities for a property. The sales price is voluntarily subject to VAT and in return you receive the right to claim input tax on investments made/costs incurred. Alternatives for the transfer of a property are the so-called notification procedure or the transfer in accordance with the statutory regulation as an “exempt supply”. The notification procedure can be used, for example, if a property is transferred to a closely related person. The statutory regulation generally applies if “nothing is done” from a VAT perspective and therefore neither the transfer with option nor the notification procedure is chosen. In the case of a transfer as an “exempt supply”, there is a risk that high input tax amounts will subsequently have to be repaid to the Federal Tax Administration (FTA) or that the buyer will be denied a potential subsequent input tax deduction.

For these reasons, in many cases it is worth involving a VAT specialist when managing a property, especially in the case of a transfer.

Worth knowing:

Even for a private individual who owns one (1) property and does not rent it out, at least in part, for residential purposes, it is possible to optimize VAT, which can lead to an increase in returns.

Your contact person

Thomas Meister

Certified Tax Expert

Fiduciary with Federal Certificate

+41 (0)62 556 69 80

[email protected]