Sale of Leased Real Estate excluding VAT

24. November 2020 | Reading Time: 1 Min

At the negotiations between the Coordination Committee and the Chamber of Tax Advisors on 9. 9. 2020, a contribution compiled by our colleagues, specifically, Jana Jirmásková and Filip Oudes was approved by the representatives of the Ministry of Finance and the Directorate General of Public Finances.

The content of the contribution is an analysis, from the VAT perspective, of the situation when selling real estate with tenants. Specifically, it focuses on the issue as to when such a transfer can be considered a transfer of a commercial enterprise which is not the subject of VAT.

The contribution confirms the sale of a real estate is, under certain circumstances, a transfer of a commercial enterprise and thus is not subject to VAT. This refers especially a situation when a real estate including leases is sold. One of the main conditions for applying such an arrangement is that both the buyer and seller use the real estate to provide leases. This condition, however, is not fulfilled if the subject of the seller’s activity is real estate development and it has rented out the real estate with the purpose of increasing the sale value.

Should you have any questions regarding the issues above, please do not hesitate to contact Filip Oudes and Jana Jirmásková , e-mail: filip.oudes@tpa-group.cz , jana.jirmaskova@tpa-group.cz .

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