- The General Financial Directorate (GFD) issued new guidance on VAT application to immovable assets, effective July 1, 2025, in response to major amendments to the VAT Act.
- Key changes include new tax exemption rules for real estate sales and updated classification of land as building land.
- The VAT Act now distinguishes between the first and subsequent supply of selected real estate, with specific definitions for structures permanently attached to land and functional units.
- The first supply of selected real estate within 23 months of completion or substantial change is taxable; subsequent transfers are VAT-exempt.
- Correctly determining whether land forms a functional unit with a building is crucial for VAT treatment, with special cases addressed for land with future or demolished buildings.
Source: kpmg.com
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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