Taxation of Real Estate Services

Real estate is generally considered to be property consisting of land or buildings, and
1) Any area of land over which rights or interests or services can be created,
2) Any building, structure or engineering work permanently attached to the land
3) Any fixture or equipment which makes up a permanent part of the land or is permanently attached to the building, structure or engineering work.

A supply of Services is deemed to relate to a real estate where the supply of Services is directly connected with the real estate, or where it is the grant of a right to use the real estate. A supply of Services directly connected with real estate includes: (1) The grant, assignment or surrender of any interest in or right over real estate, (2) The grant, assignment or surrender of a personal right to be granted any interest in or right over real estate, (3) The grant, assignment or surrender of a license to occupy land or any other contractual right exercisable over or in relation to real estate, including the
provision, lease and rental of sleeping accommodation in a hotel or similar establishment, (4) A supply of Services by real estate experts or estate agents and (5) A supply of Services involving the preparation, coordination and performance of construction, destruction, maintenance, conversion and similar work.

The supply of real estate including sale and tenancy contracts is a supply of goods. The place of supply of goods is the UAE, where the goods are located in the UAE when sold and the supply does not involve the export of goods from the UAE. Therefore, any real estate located in the UAE (except property located in a Designated Zone) is supplied in the UAE. As a result, it will be subject to UAE VAT. Where a supply of services is considered to be related to real estate, the place of supply of the services is where the real estate is located.

Additional features of Taxation on Real estate:
1) Where a UAE citizen owns or acquires land in the UAE on which the person builds or commissions the construction of his own residence, he shall be entitled to make a claim to the FTA to repay the VAT on the expenses of constructing the residence. The claim may only be made by a natural person who is a UAE
2) Any records related to a real estate required to be kept shall be held for a period of 15 years after the end of the Tax Period to which they relate.