October 2017 Update – Option to subject professional leasing to VAT initiative cancelled

Following up on our earlier post in September, we have meanwhile been informed that the Federal Government has ultimately decided past weekend to cancel the proposed introduction of an optional mechanism to subject professional leasing to VAT for notably budgetary reasons.

We believe this is highly unfortunate. The introduction of such a system could have drastically improved the competitivity of professional tenants towards foreign competitors and could have affected the real estate market on various fronts. Importantly, the system would have eliminated the need for complex structures to make the VAT-system applicable to a priori exempted transactions.

Notwithstanding the above, it cannot be excluded that the Federal Government may still introduce more minor changes to the existing real estate VAT regimes such as regarding the putting at the disposal of storage facilities. The discussions regarding these matters is still ongoing and other initiatives may still be developed.

Our Tax practice will keep you up date regarding these evolutions via our News section.