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VAT on leases

  • 20-10-2008 9:41am
    #1
    June2008
    Closed Accounts Posts: 61 ✭✭


    Hi, I'm looking to assign the remainder of my lease to a new teneant but the landlord says that if it is longer than 10yrs then it is subject to VAT. Is this VAT on the rent or is it on something else? i.e. I assume its 21% on the yearly rent of E33,800?

    Thanks


Comments

  • #2
    EKRIUQ
    Registered Users, Registered Users 2 Posts: 4,387 ✭✭✭EKRIUQ


    Are you sure he doesn't mean stamp duty?

    When leasing property stamp duty also arises. If the lease does not exceed 35 years or is indefinite stamp duty charges are at a rate of 1% of the average annual rent. If there is a rent review clause in the lease an additional fixed duty of €12.50 is payable

    If a "premium" otherwise know as "key money" is paid for a lease, this is also liable to stamp duty.

    Your Solicitor is best to advise in relation to actual stamp duty payable.


  • #3
    June2008
    Closed Accounts Posts: 61 ✭✭June2008


    thanks but im pretty sure he meant VAT because he's trying to persuade me to sell a 10yrs lease instead so VAT can be exempted. Apparently if we assign the 25yr remainder then the tenant would have to pay the equivalent of 1 yrs rent in VAT which would amount to 33,800! just want to know what kind of payment that would be!


  • #4
    Mr. Incognito
    Registered Users, Registered Users 2 Posts: 9,798 ✭✭✭Mr. Incognito


    Yes he means VAT.

    And your tax advisor is probably your best man. Solicitors generally aren't au fait with tax in my experience, even though I am one.

    Vat is chargeable on leases over ten years, at 13.5%. If the lease is between 10-20 years there is a reversionary interest on the assignment calculation so best to have a professional look into it for you mate.


  • #5
    DubTony
    Registered Users, Registered Users 2 Posts: 3,267 ✭✭✭DubTony


    Isn't this simply a paper transaction, so instead of you collecting it and the new tenant reclaiming it, it's simply noted but not paid? I don't recall paying any vat on the last lease I took (20 year lease) and do remember my accountant having me sign something so that I didn't have to pay vat.


  • #6
    redroar1942
    Closed Accounts Posts: 388 ✭✭redroar1942


    Sorry to go slightly off topic but I dont think my Q is worth a new thread.

    Is it normal to pay VAT on a delivery charge? I've recently started a retail business and have noticed that I'm being charged 21% on my 40 euro delivery charge. Is this the norm?

    Thanks in advance and apologies to mods if I'm breaking any rules.


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  • #7
    DubTony
    Registered Users, Registered Users 2 Posts: 3,267 ✭✭✭DubTony


    shouldn't it be 13.5%? Either way, there is usually vat on delivery charges. Aren't you registered?


  • #8
    redroar1942
    Closed Accounts Posts: 388 ✭✭redroar1942


    Still in the process of registering the business, we were keen to get started and couldn't wait.

    The VAT on the clothing we buy is 21%

    Should the VAT on the delivery charge be 13.5% ?


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