Bauexperte
2012-05-02 12:20:14
- #1
[B]FG – No [B]real estate transfer tax on future (subject to VAT) construction costs
A construction contract concluded in connection with the acquisition of an undeveloped plot of land and which triggers VAT liability for the builder is generally not subject to real estate transfer tax.[/B]
The construction contract is not a purchase agreement for real estate, but an independent contract for work and services concerning an object yet to be created. Since the obligation to perform construction services is not designated as a taxable transaction in § 1 of the Real Estate Transfer Tax Act, no real estate transfer tax is due here, but only VAT.
Background:
The plaintiffs acquired an undeveloped plot of land and subsequently concluded a construction contract with a construction company for the erection of a semi-detached house on the acquired land. The total price for the future house also included VAT. Based on the case law of the II. Senate of the Federal Fiscal Court (BFH) regarding the so-called unified performance object, the tax office saw an objectively close factual connection between the land purchase contract and the construction contract concluded in temporal connection and assumed a “unified contractual transaction”. At the time of the conclusion of the land purchase agreement, the plaintiffs had already decided on the construction plan developed by the construction company. The tax office regarded the future building plot as developed land and thus as the object of acquisition and increased the real estate transfer tax for the plaintiffs taking into account the construction costs. A lawsuit was filed against this, since there were no connections between the sellers of the land and the contracted construction company, so that no “unified performance object” could be assumed.
Decision:
The plaintiffs were successful with their lawsuits. The defendant tax office wrongly included the costs of the residential building in the assessment basis for real estate transfer tax. Only the land purchase contract creates a claim for transfer of ownership (of the land). The construction contract, on the other hand, is an independent contract for work and services concerning an object that is yet to be created. Since the obligation to perform construction services is not designated as a taxable transaction in § 1 of the Real Estate Transfer Tax Act, no real estate transfer tax but only VAT is due for this.
(Lower Saxony Fiscal Court, judgment of 26.08.2011, 7 K 192/09, 7 K 193/09)
Practical note:
The judgment is to be welcomed as it rightly regulates an often-chosen practical implementation of building construction in favor of taxpayers. However, it must be strongly emphasized that the judgment should be treated with caution, as an appeal has been admitted. In particular, the II. Senate of the BFH supports the opinion of the defendant tax office, even if in this case real estate transfer tax is levied cumulatively on already paid VAT amounts and thus violates § 4 No. 9 letter a UStG. Therefore, the final decision by the BFH is pending. In the meantime, it is advisable to acquire the land independently of a developer and then to allow as much time as possible to pass between the acquisition of the land and the subsequent construction of the building.
Source: 30.04.2012 | Haufe.Taxes
Kind regards
A construction contract concluded in connection with the acquisition of an undeveloped plot of land and which triggers VAT liability for the builder is generally not subject to real estate transfer tax.[/B]
The construction contract is not a purchase agreement for real estate, but an independent contract for work and services concerning an object yet to be created. Since the obligation to perform construction services is not designated as a taxable transaction in § 1 of the Real Estate Transfer Tax Act, no real estate transfer tax is due here, but only VAT.
Background:
The plaintiffs acquired an undeveloped plot of land and subsequently concluded a construction contract with a construction company for the erection of a semi-detached house on the acquired land. The total price for the future house also included VAT. Based on the case law of the II. Senate of the Federal Fiscal Court (BFH) regarding the so-called unified performance object, the tax office saw an objectively close factual connection between the land purchase contract and the construction contract concluded in temporal connection and assumed a “unified contractual transaction”. At the time of the conclusion of the land purchase agreement, the plaintiffs had already decided on the construction plan developed by the construction company. The tax office regarded the future building plot as developed land and thus as the object of acquisition and increased the real estate transfer tax for the plaintiffs taking into account the construction costs. A lawsuit was filed against this, since there were no connections between the sellers of the land and the contracted construction company, so that no “unified performance object” could be assumed.
Decision:
The plaintiffs were successful with their lawsuits. The defendant tax office wrongly included the costs of the residential building in the assessment basis for real estate transfer tax. Only the land purchase contract creates a claim for transfer of ownership (of the land). The construction contract, on the other hand, is an independent contract for work and services concerning an object that is yet to be created. Since the obligation to perform construction services is not designated as a taxable transaction in § 1 of the Real Estate Transfer Tax Act, no real estate transfer tax but only VAT is due for this.
(Lower Saxony Fiscal Court, judgment of 26.08.2011, 7 K 192/09, 7 K 193/09)
Practical note:
The judgment is to be welcomed as it rightly regulates an often-chosen practical implementation of building construction in favor of taxpayers. However, it must be strongly emphasized that the judgment should be treated with caution, as an appeal has been admitted. In particular, the II. Senate of the BFH supports the opinion of the defendant tax office, even if in this case real estate transfer tax is levied cumulatively on already paid VAT amounts and thus violates § 4 No. 9 letter a UStG. Therefore, the final decision by the BFH is pending. In the meantime, it is advisable to acquire the land independently of a developer and then to allow as much time as possible to pass between the acquisition of the land and the subsequent construction of the building.
Source: 30.04.2012 | Haufe.Taxes
Kind regards