I am advised by the Revenue Commissioners that under the EU VAT Directive (Council Directive 2006/112/EC), VAT on taxable sales of property must be applied to the full consideration. Specifically, Article 73 of the Directive provides that the taxable amount shall include everything which constitutes consideration obtained or to be obtained by the supplier, in return for the supply. Irish VAT legislation must comply with the EU VAT Directive and therefore there is no scope to reduce the taxable amount to which VAT applies in the circumstances described by the Deputy. Where the vendor of a refurbished property makes a taxable sale of the property, the VAT on input costs incurred in the refurbishment of the property is deductible. Where the vendor makes an exempt sale of the property, no input VAT is deductible and no VAT liability arises. The rules that govern whether a property sale is taxable or exempt are contained in Section 94 of the VAT Consolidation Act 2010 and are described in the VAT on Property and Construction section on the Revenue website.
