Land development operations (VAT)

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TVa sur lotissement de terrain

VAT on land development operations 

From a VAT standpoint, the development and servicing of building lots is deemed to be a real estate operation

The General Tax Code (GTC) defines a land developer as “any person who carries out development or servicing work on building lots with the purpose of selling it in its entirety or by allotment, regardless of how it is acquired“.

Land development operations include:

  • First, the installation of water and sewage pipes
  • Second, electrification
  • Third, communication wiring
  • Fourth, the construction of pavements and roads;
  • Fifth, the construction and/or installation of curbs, sidewalks ;
  • In general, any operation whose objective is the transformation of a raw land into a constructible one.

Land development operation – VAT treatment

Land development operations are subject to VAT. Indeed, article 89 of the GTC states that:

“I- Are subject to value added tax: (…)

4°- real estate works, land development operations and real estate development operations ; (…)”

However, this VAT operates differently from other taxable transactions. Indeed, the sale of land itself is outside the scope of VAT.

Taxable base for land development operations

The taxable “turnover” is, according to article 96 of the GTC, for the operations of allotment, the cost of the installation and development works.

Tax status of land owners who engage in land development

Land owners who engage in land development operations must be divided in two categories:

  • First, those who perform these operations themselves
  • Secondly, those who entrust them to third parties.

Land development entrusted to third parties

According to Circular 717, there is no difficulty in taxing such work. Indeed, in this case land owners bear the VAT on the work invoiced to them by their contractors. However, they remains under the obligation to submit a tax return

Land development performed by the owner himself

In this case, the land development is regarded as self-supplied goods (or self-constructed assets) and is, as such, subject to value added tax.

The land developer must determine the taxable base according to the cost of the servicing work. This cost is formed of expenses relating to  studies, incorporated supplies and labor.

Special case of lands intended for construction

A person who develops land and then edifies buildings on it is considered a real estate developer. In this case, the taxable base is determined when buildings are sold.


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