VAT Refund For New Residence
Are you a UAE National building your dream residence in the UAE? There's good news – you may be eligible for a special VAT refund on certain construction-related expenses. Let's break down how it all works and what you need to know.
1. How it Works:
The process starts with submitting a "New Residence VAT Refund Request" to the Federal Tax Authority (FTA) through their e-Services portal. Along with the request, you'll need to provide the necessary supporting documents, including your personal details and property information. The FTA will then review your application to determine if you meet the eligibility criteria.
2. What Qualifies as a 'Residence'?
For VAT purposes, a 'residence' means any building predominantly used as a private home by a natural person. This includes townhouses and villas, along with their fixtures, fittings, and essential facilities like cooking, washrooms, and sleeping quarters.
However, any additional structures or attachments to the residence aren't automatically considered 'residences' under the New Residences Refund Scheme. They must meet the same criteria mentioned above on a standalone basis. For example, adding a playroom to your home won't make it eligible for VAT recovery, but building a second house with the necessary facilities might.
It's important to note that buildings and units registered for commercial purposes, like hotel apartments, don't qualify as 'residences' under this scheme.
3. Who's Eligible?
The VAT refund claim can only be made by a UAE National who holds a Family Book.
4. What Expenses are Reclaimable?
To be considered for a VAT refund, your expenses must meet specific conditions: The expenses must be related to a newly constructed building, intended solely for your residence and/or your family.
You can recover VAT on building materials typically used in residential construction and services provided by contractors, such as builders, architects, engineers, and similar professionals required for the construction of your residence.
VAT on transport costs and clearing agent fees for imported building materials can also be recovered if they are directly related to constructing a private residence for a UAE citizen or their family.
Not all items are eligible for VAT recovery. For example, furniture, appliances, landscaping, and swimming pools are not considered incorporated into the building, so their VAT isn't recoverable. On the other hand, items like central air conditioning, doors, and sanitary units that are fixed into the building structure are eligible for VAT recovery
5. When to Submit Your Application:
You must send your Refund Request to the FTA within 12 months from the date of the newly constructed residence's completion. This is either when the residence becomes occupied or when it's certified as completed by a competent authority in the UAE (the Building Completion Certificate).
6. Application Process:
All applications for New Residence VAT Refunds should be submitted through the FTA e-Services Portal. When applying, you'll need to provide several documents, including your Emirates ID, Family Book, property completion certificate, and more. These documents help support your application.
The FTA may request original documents or additional information, so be prepared for these potential requirements.
If you have questions or need support regarding your VAT refund for your new residence, feel free to reach out to us at finance@hicuae.com. We're here to help you navigate the process and ensure you get the most from this valuable opportunity.
