tag: stamp duty

VAT can cause a lot of complications when it comes to interpreting our regular contracts. Does the purchase price include VAT if the parties have not explicitly stated so? Should a guarantee withholding be made from an amount that includes VAT? Does the stamp duty need to be paid on the gross or the net price of the property? These questions are particularly timely in light of the recent reduction in the VAT rate on newbuild homes: who stands to benefit from this – the builder or the apartment buyer?

Back in the day, buyers and sellers were better off selling shares in a company with possession of the property, rather than the property itself; but over the years, legislators have chipped away steadily at the benefits of acquiring property through a company purchase. Contrary to common belief, however, buying real estate through a company can still bring a number of tax advantages; and the range of these is set to expand from January of next year.

The recently adopted tax law changes significantly expand the definition of related parties. As of 2015 not only those companies will qualify as related parties which are connected in their ownership chain, but also those with an overlap in their management. As a result, the number of transactions where parties have to apply arm’s length pricing will increase. The new definition may, however, cause uncertainties as well.