Price agreed for real estate transfer tax always VAT exclusive

The financial administration published a very important opinion on 24 November 2017 which reflects the decision of the Supreme Administrative Court (SAC) on including (or not including) VAT in the agreed price when applying the correct procedure for determining real estate transfer tax. The financial administration agreed with the decisions, and in September, it publicly accepted excluding VAT from the real estate tax base in cases where the tax was paid by the transferor and the transfer was executed between 1 January 2014 and 31 October 2016. The logical question is: What is the correct procedure for cases where the payer of the real estate transfer tax is the acquirer?

The financial administration came to the conclusion that VAT should not be included in the tax base if the VAT is included in the agreed price. The SAC's decisions have been generalised and extended for cases when the real estate transfer tax payer is the acquirer and the transfer was executed after 31 October 2016. The above-mentioned facts are implicit in the SAC's decisions when the Court did not state that the same principle should not be used for a tax payer who is the acquirer. The above-mentioned facts also comply with tax neutrality. There should not be cases where the acquirer is charged with a higher real estate transfer tax just because the transferor is a VAT payer (the VAT increases the real estate transfer tax base). With respect to the above-mentioned facts, the financial administration decided to change the methodology and the administration.

The financial administration will apply the stated conclusions to cases where the tax proceedings have not yet been finished. If the tax proceedings have already been finished (and tax is assessed), the tax payers can exercise their rights by submitting additional tax returns. Further, the financial administration recommends determining the amount of VAT in agreements related to the acquisition of property rights which should simplify calculation of the agreed price. The acquirer should thus easily and correctly determine the real estate transfer tax base, and this should also avoid pointless and additional paperwork, such as additional tax returns.