No VAT Deduction Allowed for Construction Costs of Residential Properties Later Rented Out by Company

• The company was denied deduction for input VAT on expenses related to the construction of eight terraced houses intended for residential rental.
• The company declared the houses would be rented out and registered the property accordingly; after completion, the houses were rented as planned.
• The Tax Appeals Board found the company did not prove an exclusive intention to sell the houses individually at the time of deduction.
• The property was consistently recorded as a fixed asset and investment property, and the houses were not individually subdivided.
• The company acted at least grossly negligent by deducting VAT for properties used for VAT-exempt rental, justifying extraordinary adjustment of its VAT liability; the Tax Appeals Board upheld the Tax Agency’s decision.

Source: info.skat.dk

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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