Indirect Tax Briefing
On 24 March 2025, the Tax Department issued Circular 2/2025, allowing the submission of Form T.D.1220 until December 31, 2025, for electing the non-taxation of immovable property leasing and/or renting, without any implications arising from late notification to the Tax Commissioner.
It is clarified that the provisions of the circular apply to lease agreements concluded on or after 13 November 2017 (the effective date of Law 157(I)/2017), provided that the following conditions are met:
a) the lessor has not informed the Tax Commissioner via Form T.D.1220 of their choice to exempt the lease/rental from VAT and has not charged VAT on the transaction, and
b) the lessor has already declared the lease for direct tax purposes, thereby complying with their tax obligations related to the lease (income tax, GHS contribution, and Special Defence Contribution).
This circular does not apply where the lessor has imposed VAT to a taxable person using the property for conducting taxable business activities, thereby allowing the lessee to deduct the imposed VAT.
Circular 2/2025 remains in effect until 31 December 2025. From 1 January 2026, for leases to taxable persons who use the property for taxable business activities, the lessor may opt for non-taxation by notifying the Tax Commissioner within 30 days from the lease date through the submission of Form T.D.1220.
