Sectors

The reverse charge mechanism in the construction sector applies when the service is listed in Annex 14 to the VAT Act and the customer is a VAT taxpayer acting as a general contractor or investor rather than a consumer. The subcontracting requirement is key – we verify whether the reverse charge mechanism applies to your specific contracts.

IFRS 15 requires revenue to be recognised in line with the progress towards completion of the contract. It is essential to correctly define the performance obligations and the method used to measure progress. We help implement the appropriate revenue recognition principles and provide contract accounting support.

As a general rule, the sale of residential units by a property developer is subject to an 8% VAT rate where the property falls within the social housing programme, or a 23% VAT rate in other cases. Correct classification of the property and its floor area is key. We advise on the structuring of property development transactions and verify that the correct VAT rates are applied.

SPVs are commonly used in property development projects and offer a number of advantages, including isolating project risk, simplifying financing and accounting, and enabling the sale of shares rather than the property itself. However, we analyse each case individually – an SPV also involves administrative costs and may not be the most tax-efficient structure in every situation.