2023 was a difficult year for the Irish real estate market, with multiple challenges including inflationary pressures, the ever increasing cycle of interest rate increases and the focus on environmental, social and governance (ESG) issues which brings with it additional regulatory compliance. In addition, the fall-out from the pandemic continues to over-hang the property market with the seismic shift in working practice continuing with hybrid and remote working models becoming established. Recent reports suggest a significant disconnect between what employees increasingly want (hybrid/remote) and what employers may prefer (return to the office).
All of the above create an exceptionally challenging landscape for employers and for property investors. But is there light at the end of the tunnel? Certainly inflationary pressures are slowing down and there are rumblings of potential reductions in interest rates. What impact will this have? Do the ESG regulations provide opportunities for investors as to where they should put their money and to employers as to how they can attract talent back to the office?
With any revision to arrangements for property ownership, occupancy or use, there are many VAT issues that need to be considered. It may seem like ancient history, but the “VAT on property” rules changed significantly almost 16 years ago in July 2008. These rules changed how VAT was dealt with for vendors and purchasers as well as for landlords and tenants. And that is in addition to the “transitional” rules covering transactions in properties straddling both the “old” and “new” rules. For example, there are many “long leases” granted prior to 2008 that are coming up to expiration. Once these old leases expire, the new rules kick in for any new arrangements. The associated VAT related measures and actions need to be carefully considered and addressed. One thing is for sure - how a current property transaction is dealt with for VAT is likely to be very different to that applied to a pre-2008 transaction.
With the passing of time, VAT rule familiarity is certainly helping navigation of the VAT treatment of property transactions. However there remains a plethora of rules to consider depending on the transaction and parties involved. That covers VAT to be charged and VAT recovery to be preserved. And not all of the VAT related burdens, either financial or administrative, can be offloaded. Knowing the implications for you and your counterparty are essential to getting the best commercial outcome for a property transaction, whatever side you are on.
VAT considerations can sometimes be the poor relation when it comes to property transactions, often only considered late in the day. However with proper planning and consideration, VAT pitfalls can be avoided and potential VAT opportunities can be maximised.
Commercial Property Update - Register Now
Join RBK, together with James Nugent, Senior Director at Lisney who will provide an industry overview of what they are seeing in the market, Roisin Bennett, Head of Property at Reddy Charlton Solicitors will provide insight into topical legal considerations in relation to commercial lettings, including the impact of recent Court decisions. RBK’s VAT Director, John Moore, will discuss some of the pitfalls and opportunities we are seeing in the market and key VAT considerations around sales of property, lease terminations, surrenders and lettings.
DATE: Thursday, 11th April 2024
TIME: 12.30pm - 2.00pm
VENUE: Clayton Hotel Leopardstown, Central Park, Sandyford Business Park, Dublin, D18 K2P1.
Who should attend?
This hybrid event is of interest to real estate investors and businesses who may be considering moving property or varying an existing lease, as a landlord or a tenant.
