Current Minister of Finance plans to extend the definition of “Social Housing”. From the beginning of the 2008 the VAT for new residential building will increase to regular 19% rate from lower 5%. Czech Republic plans to set category which is called “Social Housing” and all appartements/houses in this group will still have lower 5% VAT rate. Previous government’s proposal was 90 sqm for apartments and 150 sqm for houses. Current Minister of Finance stated for MF daily that the range should be widened, without any specification.
Our view:
We believe that this exemption could be positive in shorter term for developers as the demand for this category of housing is increasing ahead of the deadline, however due to unsolved political situation we see the news only as a political rhetoric.