At the Coordination Committee on 9 September 2020, a contribution compiled by our colleagues, specifically, Jana Jirmásková and Filip Oudes was approved by the representatives of the Ministry of Finance and the Directorate General of Public Finances. A Coordination Committee is a platform between the mentioned fiscal authorities and the Chamber of Tax Advisors. The Coordination Committee privdes a generally accepted interpretaions of tax issues. The content of this contribution is an analysis, from the VAT perspective, of the situation when property with tenants is subject to sale. Specifically, it focuses on the issue as to when such a transfer can be considered a transfer of a going concern which is not the subject of VAT.
The contribution confirms that the sale of a property is, under certain circumstances, a transfer of a going concern and thus is not subject to VAT. This refers especially a situation when a real estate including leases is sold. One of the main conditions for applying such an arrangement is that both the buyer and seller use the real estate to provide leases. This condition, however, is not fulfilled if the subject of the seller’s activity is real estate development and it has rented out the real estate with the purpose of increasing the sale value.
We are very pleased that the Czech Financial Administration is inclined to agree with this interpretation, which is in accord with the long-term opinion of TPA. We think it is a further step towards greater legal certainty in asset deals. At the same time, a harmonization of interpretation within the bounds of the EU has occurred. For instance, in Germany, the transfer of the sum of commercial enterprise or the part thereof which is not the subject of VAT is labelled “Geschäftsveräußerung im Ganzen” or as “Veräußerung eines Unternehmens im Ganzen”. In the case of Great Britain, the transfer of the sum of commercial enterprise or the part thereof which is not the subject of VAT is labelled as “transfer of going concern”.
Filip Oudes and Jana Jirmásková will be pleased to discuss the details with you, email: email@example.com , firstname.lastname@example.org .