The first part of Discussion Paper No. 606/03.05.23 defines ‘apartment buildings’ and ‘family houses’, as these terms have been taken over from the new Construction Act. The new definition no longer explicitly includes the condition of family houses and apartment buildings being designated for permanent housing under construction law. The GFD confirmed that the definition of buildings for housing purposes has not materially changed and therefore their intended use for permanent housing remains one of the characteristics of apartment buildings and family houses.

Furthermore, the GFD agreed with the Coordination Committee’s conclusion regarding the transitional provisions on the concept of a family house. Newly, family houses can have a third floor not only under a pitched roof but also under a flat one. The definition of a family house has thus been broadened and the transitional provisions adopted in the context of this change have no real impact on practice.
To determine the correct VAT rate, it is necessary to determine the floor area that is crucial for meeting the definition of social housing.

The new Construction Act has its own definition of the floor area; the question therefore was whether the floor area will be calculated according to the Construction Act. The GFD refuted this interpretation and confirmed that the floor area calculation remains unchanged for VAT purposes and can still be determined based on the GFD’s information published at the end of 2015.

Can VAT payers rely on the information on the real property type entered in the real estate register? According to the GFD, yes, as registration in the real estate register is crucial for the purposes of building assessment. The taxpayer would bear the burden of proof only for buildings that become a family house after the amendment and whose registration in the real estate register occurs before the application of the new definition of a family house. In the case of new buildings that have not yet been registered in the real estate register, payers should mainly rely on the project documentation and building permit, from which it should be clear that the conditions for a family house or apartment building have been met.

Kateřina Klepalovákklepalova@kpmg.cz+420 222 124 324

Eliška Hollasováehollasova@kpmg.cz+420 541 421 338