If you reside in any EU country including the UK where VAT tax is applicable then you should study vat new build rules before building or renovating your home. If, for example, you live in the UK then there are several vat rules that apply to you or your contractor when you sign a contract or even build your own home.
It is Her Majesty’s Revenue and Customs or hmrc department that issues uk vat rules that are normally based on eu vat guide lines issued by the European Commission. If you plan to purchase a readymade home from a builder of your choice then you will not have to pay any vat on your new home since sales of homes are vat exempt in the UK. If you plan to build your own home on a plot of land with the help of a contractor then even though your contractor might be vat registered and pay vat on all purchases made for your home such as tiles, concrete, wood, etc, he or she cannot pass on the charge to you. Instead the contractor will need to issue zero rate vat invoices to you and claim back whatever vat has been paid by him or her on your project.
If you have decided that you will construct your new home all by yourself without the help of any contractor or sub-contractor then you will need to buy all the required material for your home all by yourself. Again, in such a case even though you will need to pay vat against all purchase invoices for material for your new build, you will be able to claim almost all that amount back from hmrc vat. You will need to preserve each vat invoice carefully as proof of having paid vat on them.
You should also hire a vat agent that is well-conversant with vat new build rules issued by hmrc. This will help you to avoid any misunderstanding while filing for vat reclaim since any mistake on your part could result in an unwanted vat audit by hmrc officers. There are also certain services and products for your home such as designing services, electrical appliances for your new home, certain kitchen units, etc that cannot be claimed back from hmrc. These vat rules for new build refer only for personal and domestic homes and are different from rules for people that engage in building new homes purely for commercial reasons or form part of their businesses. If you do have any doubts in your mind then you can visit the hmrc website that offers many vat online services other than simply helping the public by explaining each vat rule in detail.
You will also need to understand on which vat form to fill out while applying for a vat refund from hmrc. Again, if you have imported certain goods for your new build from any eu country that also follows vat and have been charged vat in the country of origin before those goods were imported into the UK then you will still be able to claim that vat amount back. Your vat agent would be able to guide you on all the relevant documents to be submitted with your new build reclaim forms. Once you have submitted all your documents to hmrc then you can expect a vat refund within 3 to 4 months.
If you plan to hire a contractor or build your own home in the UK then you will not need to pay vat for most goods and services while also be able to claim back vat already paid in the UK or even in any other eu country. You should, however, engage the services of an expert vat agent well-conversant with vat rates and reclaims on new buildings, construction, renovation, and conversion before you try to reclaim vat on your vat new build.