VAT and fractional ownership

4 December 2008

Interpretation Note 1677. Fractional ownership - confirms that the supply of fractional rights and interests constitutes "fixed property" for VAT purposes. The consequences for VAT registered developers is that they have to account for VAT at 14% on the sale of each fraction, regardless of the nature of the fractions sold (i.e. shares or undivided title deeds).

Regarding the supply of holiday accommodation by a developer, it will not constitute a taxable supply, unless it qualifies as "commercial accommodation", as defined. VAT implications for rental pools are also discussed. In conclusion, it is worth noting that potential investors in this "non-traditional" form of ownership should familiarise themselves with the tax consequences of other taxes such as capital gains.

November Ingtegritax Newsletter

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