On the 11th of November 2022, the Regulatory Administrative Act K.Δ.Π. 423/2022 was published in the Government Gazette, amending the Eighth Schedule of the VAT Law (95(I)/2000) (the "VAT Law") in relation to the supply of immovable property. More specifically, this means that the Council of Ministers approved the amendment of Schedule 8 of the VAT Law in relation to the criteria which determine whether the supply of an immovable property is considered as taxable or exempt from VAT.
As per the provisions of the Regulatory Administrative Act Κ.Δ.Π. 423/2022, Schedule 8 of the VAT Law has been amended as follows:
- by replacing at the end of subparagraphs (i) and (ii) of paragraph 1(b), the phrase "before first occupation" with the phrase "before the first supply within a period of five (5) years from its completion and any subsequent supplies, within the period of the five (5) years, provided that no actual use has occurred by a non-related party, for a period of at least twenty-four (24) months."
- By replacing paragraph 3 with the following new paragraph 3:
"3. For the purposes of the present Law,
- completion means its completion, so that it can be capable to be set for its intended use.
- actual use means its use on a continuous basis.
- a related party has the meaning as set out in paragraph 1(4) of Schedule 4 of the present Law."
The VAT Law prior to this Amendment:
The supply of immovable property was subject to VAT provided it occurred prior to its first occupancy, following its construction. First occupancy included self-occupancy, own use, rental or any other use. In case the supply was effected after their first occupancy, the transaction was treated as exempt from VAT.
The VAT Law after this Amendment:
According to the provisions of the Regulatory Administrative Act Κ.Δ.Π. 423/2022, VAT should be imposed on the supply of immovable property in the following circumstances:
- on the first supply of a building within a period of five (5) years from its completion; and
- in cases of succeeding supplies of the same building occurring after the first supply within five (5) years from its completion.
In relation to both of the above cases one essential condition must be satisfied: that the relevant building has not been used on a continuous basis by a non-related party for a period of at least twenty-four (24) months.
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