Not sure I saw this one, apologies if it is a dupe.
finance.gov.ie/viewdoc.asp?D … y+2010&m=n
Minister for Finance announces intention to introduce a transitional VAT deductibility adjustment measure for the supply of housing by public bodies including local authorities in certain circumstances
The Minister for Finance, Mr. Brian Lenihan T.D., today 30 June 2010, announced that he intends to bring forward legislative changes in the Finance Bill 2011 to deal with the VAT treatment of some properties to be sold by public bodies after 1 July. The measures will apply in particular to housing supplied by public bodies, including local authorities, after 1 July 2010, which was acquired or developed by them before that date, and where there was no entitlement to deductibility on VAT inputs. Currently such properties will become subject to VAT on 1 July but where the property was acquired or developed before public bodies became subject to VAT, there would be no entitlement to deduct input VAT in respect of the purchase or development of the property. To overcome the resulting difficulty a transitional VAT deductibility adjustment measure is being introduced.
In making the announcement the Minister said:
“The supply of local authority housing will become subject to VAT from 1 July 2010 as a consequence of the Judgement in the European Court of Justice Case 554/07. However, a transitional difficulty arises where property is liable to VAT in full from 1 July 2010 without having entitlement to deduct VAT at the input stage where the property was acquired or developed by the public body, including a local authority, before the introduction of VAT.
Concerns have been raised on this issue in recent months and having considered the matter I have decided to introduce a transitional measure to adjust VAT on the point of sale of such properties. In this regard, I intend that Section 4C of the VAT Act 1972, which provides an adjustment for a similar type transitional difficulty which arose in 2008 when the new rules for VAT on property were introduced, be extended so as to provide a deductibility adjustment no greater than the value of the VAT due on the sale, for housing sold by public bodies after 1 July 2010, which were acquired or developed by them before that date, and there is otherwise no entitlement to claim VAT input credit.
It is desirable that this measure applies from 1 July 2010 when public bodies become subject to VAT. Consequently, the Revenue Commissioners have agreed to apply the intended transitional VAT deductibility adjustment measure on an administrative basis pending the necessary legislative change being enacted.
Introducing such a VAT adjustment measure will greatly assist local authorities who otherwise would have been disadvantaged. In addition,
as the VAT adjustment will arise at the time the VAT liability is due it will avoid the need to increase the sale price to the customer.”
As indicated above this measure will be enacted in Finance Bill 2011 but will take effect from 1 July 2010.
Ho, ho, ho. Slap my thigh, that’s a good one Brian. They can’t sell it for below what it’s worth? And what it’s worth is at least what it cost to build, right?
Psst. what is also a public body that owns a lot of property from which VAT has been deducted? And which has been set up to not pay VAT if it so desired by legislation, but which might be considered a market distortion if it did try and do that?