New decree on calculating floor area for VAT purposes
The Ministry of Finance presented a draft of a new decree on the method of calculating floor area for VAT purposes. The decree responds to changes in legislation pertaining to real estate and construction, about to enter into force on 1 July 2025.
As part of the 2024 consolidation package, some provisions of the VAT Act concerning real estate and construction/buildings have also been changed and will start to apply from 1 July 2025.
As for the method of calculating the floor area for VAT purposes, the act now refers to a decree of the Ministry of Finance. The decree will replace the GFD’s information on the application of the VAT Act to immovable property after January 2016.
Situations where it is necessary to determine the floor area for VAT purposes:
- Definition of a building for social housing
- Correct determination of the VAT rate and tax base pursuant to Section 49(5) of the VAT Act
- Assessment of the possibility of applying taxation to lease of immovable property
How floor area shall be calculated under the draft decree
The floor area shall be determined as the sum of floor areas of individual rooms and spaces within the perimeter structure of the building (the decree provides precise definitions of the terms room, space, and attic). For spaces, a perpendicular projection of a non-existent wall where the floor ends shall be used. The square area at a height of 1.2 m above floor level shall be included in the calculation: this should be borne in mind especially for attics or cellars, but also other rooms or spaces with a sloping ceiling. The determined floor area in m2 of each individual room or space shall then be mathematically rounded to two decimal places.
In the explanatory memorandum to the decree, the ministry also states what shall be counted as floor area and what not.
| Room/space | Does it count as a floor area? |
|---|---|
| Balcony | No |
| Atrium | No (unless it meets the definition) |
| Arcade | No |
| Passage | No |
| Cellar | Yes |
| Underground garage | Yes |
| Doorstep | No |
| Open porch | No |
| Loggia | No |
| Staircase | No |
| Boiler room | No (unless part of a family house) |
| Engine room | No (unless part of a family house) |
| Elevator shaft | No (unless part of a family house) |
| Technical room | No (unless part of a family house) |
| Attic | Yes |
| Loft | Yes (1.2 m above floor level) |
| Built-in closet | Yes |
| Bathtub | Yes |
| Stove | Yes |
| Area under the staircase | Yes (unless it meets the definition of a room – not bricked/solid) |
| Columns and pillars inside the room | Yes |
| Columns and pillars – part of walls | No |
Changes after 1 July 2025
The calculation of the floor area will now be unified and regulated by the VAT Act, or, more precisely the decree to which the act refers.
In practice, the main change is that the floor area will not include the area underneath any vertical load-bearing and non-load-bearing structures inside the living area, such as walls, chimneys and similar vertical structures.