Vat On Tenancy Agreement

In general, there is only one type of lease, the business lease. This is governed by the Debt Act. In particular, the rental of commercial premises and commercial buildings is regulated by the Law on the Rental of Commercial Buildings and Commercial Premises, which is in force in both the Republika Srpska and the Federation of Bosnia and Herzegovina. While these are just a few of the areas that are important in a commercial lease agreement, we recommend that all commercial leases be reviewed from a tax perspective to ensure that no potential VAT/RCT issues can arise. The same treatment applies when the rental contract for the premises includes an obligation for the tenant to accept the subsequent granting of parking spaces, if or when they become available. A limited right to the use of immovable property may be based on a contract of servitude. An easement is usually created to guarantee access to real estate by adjacent properties of a third party. For a user license to exist, the agreement must have all the characteristics of a “rental or rental of real estate”. This is the case where the licensee has the right to occupy for remuneration a defined area (the land includes buildings, see point 2.1) for an agreed period of time and has the right to occupy that area as owner and to exclude others from the authorisation to use this right. The Urban Leases Act distinguishes between commercial leases and private leases, with a more protective legal system for tenants who hold urban housing leases. Commercial leases are governed primarily by the agreement of the lessor and the lessee and, in the absence of an agreement, by Title III of the Municipal Rent Act (§§ 29-35). The Civil Code is used as an additional right.

HMRC has previously taken the approach that anything done in return for a rent reduction or rent-free time can be considered consideration for VAT purposes, including a tenant`s agreement not to exercise a right of break. The lessor was considered by HMRC as a delivery to the tenant in return for the removal of its break option, and the tenant was also considered a delivery to the lessor in return for the rent reduction. The value of both deliveries is usually due to the reduction in rent. The result in practice was that a lessor who had chosen to tax immovable property was required to charge VAT to the tenant. The tenant would also be required to collect VAT if he had opted for taxation, whereas this is less common in practice. HMRC expected VAT to be collected by reference to the amount of rent abandoned by the lessor, based on the assumption that landlords and tenants make something equivalent available to each other (and, in fact, this approach is still reflected in VAT 742, paragraph 10.2). For commercial tenants, there are additional rules that are set by the local authorities. .