VAT not to be included in acquirer’s immovable property acquisition tax base

In its summer 2017 decisions, the Supreme Administrative Court (SAC) held that it is not necessary to include VAT on the agreed price in the immovable property acquisition tax base, thus deviating from the explanatory memorandum to the Senate’s statutory measure regulating immovable property acquisition tax. The memo states that the agreed price for immovable property acquisition purposes is the total price including VAT. The SAC dealt with cases when persons liable to immovable property acquisition tax were transferors and did not voice an opinion on cases when persons liable to this tax were acquirers.

Based on these court decisions, the Financial Administration of the Czech Republic issued a press release in September 2017 stating that administrative practice will be adjusted accordingly: the agreed price excluding VAT will be accepted as the agreed price for immovable property acquisition tax base purposes. However, this procedure was only to be applied to immovable property acquisitions between 1 January 2014 and 31 October 2016 and in situations in which the persons liable to immovable property acquisition tax were the transferors. 

The financial administration has recently given its views on situations in which persons liable to immovable property acquisition tax are acquirers, confirming that the SAC’s decisions may also be applied to acquirers irrespective of when tax has to be paid. This change in the administrative practice gives both acquirers and transferors the opportunity to file additional immovable property acquisition tax returns and claim back part of the paid tax. We will be happy to help you prepare your additional tax returns.