Since 2018, VAT has applied to commercial property in the UAE. Understanding these implications is essential for property owners.
VAT Basics for Property
What's Taxable
- Commercial property rentals: 5% VAT
- Commercial property sales: 5% VAT
- Property management services: 5% VAT
What's Exempt
- Residential property rentals: Exempt
- Bare land: Exempt
- First sale of residential property: Zero-rated
Commercial Property VAT Requirements
Registration Threshold
- Mandatory if taxable supplies exceed AED 375,000
- Voluntary registration above AED 187,500
What Counts as Commercial
- Office spaces
- Retail units
- Warehouses
- Industrial properties
- Mixed-use (commercial portion)
Invoicing Requirements
VAT invoices must include:
- Tax registration number (TRN)
- Invoice date and number
- Seller and buyer details
- Description of supply
- VAT amount separately shown
Claiming Input VAT
Property owners can claim VAT on:
- Property maintenance
- Management services
- Renovation costs
- Professional fees
Record Keeping
Maintain records for 5 years:
- All invoices issued and received
- VAT returns
- Supporting documentation
- Calculations and workings
Common Mistakes
- Not registering when required
- Charging VAT on residential
- Missing input VAT claims
- Incorrect invoice formats
- Late filing penalties
ProperLE generates VAT-compliant invoices and helps track all VAT-related transactions for easy reporting.