TaxSavvyAE

Individual landlord with commercial property

I own two shops that I rent out. Do I need VAT registration?

The situation

Leasing commercial property is a taxable supply at 5 percent. If your commercial rent passes AED 375,000 in 12 months, you must register even as an individual.

The law

  • Art 13, Federal Decree-Law 8 of 2017: Mandatory registration above AED 375,000 in 12 months or expected within 30 days
  • Art 46, Federal Decree-Law 8 of 2017: Residential leases are exempt; commercial leases are not listed as exempt

What it means for you

Example: two shops rented for AED 200,000 each a year total AED 400,000, so registration is mandatory. Residential rent is exempt and not counted. Once registered, you charge 5 percent on the rent and can recover VAT on maintenance of the shops.

What to do

  1. Total commercial rent for 12 months.
  2. Leave out residential rent.
  3. Register if above AED 375,000.
  4. Add VAT to rent invoices from the effective date.

We can do this for youVAT registration on EmaraTax: threshold test, voluntary registration, non-residents and tax groups: AED 950

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