VAT on Property (Transitional VAT deductibility adjustment measure for the supply of housing by public bodies)

The Minister for Finance, Mr. Brian Lenihan T.D., today 30 June 2010, announced that he intends to bring forward legislative changes in the Finance Bill 2011 to deal with the VAT treatment of housing supplied by public bodies, including local authorities, after 1 July 2010, which was acquired or developed by them before that date, and where there was no entitlement to deductibility on VAT inputs. Currently such properties will become subject to VAT on 1 July but where the property was acquired or developed before public bodies became subject to VAT, there would be no entitlement to deduct input VAT in respect of the purchase or development of the property. To overcome the resulting difficulty a transitional VAT adjustment measure is being introduced.

Please see statement today from Department of Finance VAT deductibility adjustment - public bodies.

Where a public body supplies taxable housing as described above on or after 1 July 2010 it will be liable to account for VAT at 13.5% on the sale and will be entitled to claim a deductibility adjustment in respect of that sale. The deductibility adjustment will be calculated in accordance with the Capital Goods Scheme rules. However, the public body will in no case be entitled to an adjustment amount that is greater than the VAT on the sale.