A new tax regime allows individuals building their own permanent home to recover the difference between the standard VAT rate (23%) and the reduced rate (6%). We explain how it works, the required documents, and the deadlines to meet.
How it works
When the builder issues invoices for the construction, the VAT rate applied is still 23%, which must be paid in full at the time of payment. However, after the work is completed and the certificate of use is issued, you can request a refund from the Tax Authority for the difference between the standard and reduced rates.
Deadlines
You have 12 months after the certificate of use is issued to submit your refund request. You must also update your tax domicile to the new property and keep all documentation for 5 years.
Documentation
The request is submitted electronically through the Tax Portal and must include construction contracts, proof of land value, certificate of use, and all invoices with full identification of the owner.
If the refund is refused
You can file an administrative complaint or a judicial appeal through the standard tax dispute channels.
