V.a.t

[jonesclub]

Is the following true?According to the law on VAT when buying a newly built purchase a tax of 5% is charged on the value of the land, whereas VAT of 22% is charged on the value of the building. Properties sold by individuals are exempt from VAT. if this is true does that mean I would have to pay £22000 on a property of 100000?

[Peter Ellis]

I'm not sure I fully understand you.
If a new built property is being sold by a company, which it is assumed is PDV(VAT) registered, then there will be an element of 22% PDV in the price and hence the 5% property transfer tax is only levied on the land value. Developers normally include the PDV in the asking price.
Property sold by individuals would not normally have any PDV element in them and hence the 5% property transfer tax is levied on the whole value. You would not pay any PDV on a private sale.
One thing to watch out for is developers selling under private names. Croatian private individuals are allowed to sell up to three properties in five years, free of any tax liability. Sometimes a developer will sell up to three properties, for instance in an apartment block, in the names of each of a number of family members. The sale then is a private one rather than a company one. No PDV will apply and the buyer will have to pay 5% on the total value, not just on the apportioned land value. This can make a considerable difference if the buyer has established a company in order to purchase as they will not be able to recover any PDV, as there isn't any, but will have to charge it, or at least incorporate it, when they sell.