Coordination Committee: How to determine VAT treatment of superficies payments upon establishment of superficiary right of building

Discussion Paper No. 589/24/11/2021 deals with the situation where the builder pays superficies payments for the establishment of the superficiary right of building on a recurring (e.g., monthly) basis. The superficies payment amount may be fixed or may vary over time depending on various criteria. This raises the question of when superficies payments are subject to VAT and whether the tax treatment may change over time.

The GFD agreed with the proposed conclusion that superficies payments may represent partial payments if the builder and the property owner (landowner) agree on this in a contract. This means that the superficies payments are not taxed at once, at the time the superficiary right of building is established, but are taxed gradually, always on the date specified in the contract.

Under the VAT Act, the superficiary right of building is considered as goods - immovable property that may be exempt from VAT in certain circumstances. The tax treatment will depend on whether the relevant building is already standing on the land and whether the building meets the conditions for VAT exemption. If these conditions are not met, the superficiary right of building shall be subject to the standard or first reduced VAT rate (for buildings intended for social housing).

The GFD also confirmed that the VAT treatment for individual superficies payments shall not change over time. The tax treatment will be determined according to the status of the land or building at the time the superficiary right of building is recorded in the real estate register. If the conditions for VAT exemption are not met at the time of registration of the right, the standard or reduced VAT rate shall apply to all superficies payments.