Application of the tax rate on delivery of a unit under construction

The Chamber of Tax Advisors, published the minutes of the Coordination Committee meeting of 30.04.2025. In post 628/30.04.25, the Coordination Committee addressed whether a reduced VAT rate can be applied to the supply of an unfinished unit intended for social housing.

According to Section 49(3) of the VAT Act, the reduced rate applies to the supply of buildings, land, building rights and units intended for social housing. However, there is no explicit reference to units "even if not completed", which raises a number of issues in practice, which were removed by the Coordination Committee.

The Directorate-General for Finance states in its contribution that the term 'unit' is based on the Civil Code and includes flats under construction, provided that the house has perimeter walls and a roof. The phrase "even if unfinished" is not needed for units because the legislation itself defines this possibility. Therefore, the reduced VAT rate also applies to unfinished units intended exclusively for social housing.

The key point is therefore that the unit must not include any living space other than for social housing. The entry in the Land Registry as a housing unit is not sufficient - the construction and technical designation, evidenced, for example, by project documentation, is decisive for the application of the reduced rate.