Real estate transfer tax from agreed price always VAT exclusive

Based on the decision of the Supreme Administrative Court (SAC), the financial administration in September 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. Now the financial administration has extended the approach to other cases where the tax base is the agreed price, i.e. where the tax payer is the acquirer and the transfer was executed after 31 October 2016. The conclusion complies with tax neutrality and therefore there should not involve cases where the acquirer is charged a higher real estate transfer tax just because the transferor is a VAT payer (the VAT would increase the real estate transfer tax base).

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 may exercise their rights by submitting additional tax returns. This could concern many tax payers because, based on the explanatory report and original interpretation of the financial administration, VAT was included in the tax base.

It is recommended that agreements related to the acquisition of property rights contain the amount of VAT if it is part of the agreed price.