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The ideal value-added tax (VAT) would carry an economic efficiency ratio of
100 as, in theory, VAT should not be susceptible to exemptions and rate
variations. However, practical reality tells a different story, and it will
come as no surprise to learn that the VAT systems of almost all countries
remain far from the benchmark, and that this is particularly the case when VAT
is applied to real estate. This book describes and analyses VAT treatment of
real estate transactions in six representative countries: Australia, Canada,
Germany, Japan, Mexico, and the United Kingdom. As in any jurisdiction, the
VAT schemes covered must accommodate complex factual matrices that demand
consistent, fair, and equal treatment. Among these VAT determinants the
authors, each an expert in the national tax law of one of the six countries,
address the following:
• types of real estate sales;
• long versus short term leases;
• commercial versus residential use;
• newly constructed versus existing property;
• status of the parties involved as taxable or non-taxable for VAT;
• taxable and tax-free supplies;
• special rules for charities, mooring facilities, aircraft, sports
facilities, etc.;
• subdivision of apartments into title units;
• commercial residential premises;
• construction work;
• cross-border supply of construction work and services; and
• transfer of a ‘going concern’.
The discussions also include the practical areas of accounting for VAT,
administrative compliance, personal tax liability, and VAT refund and
overpayment certification processes, as well as thorough consideration of
relevant case law and examination of frequently litigated matters. Each author
has designed his or her chapter to ensure that the technical nuances of each
system are explained. An introductory chapter outlines economic theory and
preferred VAT treatment of real estate transactions, and compares the variety
of solutions applied in the six countries covered. Although a number of legal
works exist on real estate under VAT in single jurisdictions, this is the
first book to combine a multi-jurisdictional approach with attention to
relevant economic theory, allowing for a very useful assessment of best
practices. For this reason it is sure to be welcomed by practitioners and
academics not only as an overview of the problem areas encountered when
designing VAT policy, but also as a reference in applying VAT to real estate
transactions.