Assignment of rights under the development agreement, however, with 23% VAT

• The Supreme Administrative Court ruled that the assignment of rights under a development agreement is a service subject to a 23% VAT rate, and the reduced 8% VAT rate applicable to the supply of a residential unit does not apply.
• The court determined that in cases where the assignment is made by the seller of rights who does not have the right to dispose of the residential unit as the owner, it cannot be considered a transfer of goods subject to VAT.
• Developers and investors should review their past assignments and consider the implications of this ruling, as it may require correcting past settlements and potentially result in tax arrears and price increases for contractors.

Source MDDP

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