In practice, it often happens with newly built facilities that a garage is purchased together with the apartment with the same agreement for purchase and sale of real estate. In this situation, there is often a misunderstanding when calculating the entire amount of the purchase price, including VAT.
The Law on transfer of immovable property treats the garage, among others, as immovable property. In that regard, the garage is not considered as ancillary delivery, but as an independent immovable property on which VAT is also paid. Thus, the Ministry of Finance issued an opinion No. 413-00-67/2019-04 of 1 June 2020, which stated that “the transfer of the right of disposal on a construction object or an economically divisible whole within a construction object is not considered as an ancillary delivery of goods.“
According to the above, regardless of the fact that the apartment and garage are covered by one agreement for purchase and sale of real estate, the VAT payer calculates VAT at a tax rate of 10% for apartment sales, and for garage sales at a general VAT rate of 20%. This is because a 10% tax rate does not apply to garage sales, bearing in mind that the Law on VAT stipulates that this 10% tax rate applies to the transfer of the right to dispose of residential buildings, economically divisible units within those buildings, as well as ownership shares in these goods. As the garage cannot be classified under this provision, the general VAT rate of 20% applies to the transfer of the right to dispose of the garage.