If a tenant improves a rented property with the landlord’s consent but isn’t reimbursed, the improvement’s value is considered a free service when the property is returned, and thus subject to VAT. The VAT is calculated based on the cost of the materials and services used for the improvement. If the landlord does compensate the tenant for the improvements via a separate agreement, that compensation is also a separate service subject to VAT.
Source: news.dtkt.ua
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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