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vat charged on rent by tenant to undertenant

Company A sells franchises and is a vat registered company. It finds suitable properties for its franchisee and is charged rent by the superior landlord. It then recharges this rent back to the franchisee.

Some superior landlords have opted to tax.
All of its franchisees are vat exempt (arrange financial products)

Does the company have to charge vat on the rents it charges?
(no other services relating to the property are provided to the franchisee)

greg davis

greg davis


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28th Jan 2001 21:34

VAT Exemption
From the information provided, the company does not have to charge VAT on the rent unless it elects to waive the exemption (opt to tax)on its interest in the property. However, by failing to so opt, the VAT charged by the superior landlord would not be recoverable by the company as it would relate to its onward exempt supply of the rental service.

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