Rent Free Staff Occupancy – VAT Recovery Confirmed

Owners of business properties occupied rent free by employees will breathe a sigh of relief following a recent decision of the Court of Justice of the European Union (CJEU).



In an action brought by the state of Belgium, the CJEU has confirmed that where a taxable person allows a staff member to occupy business premises free of charge, there is no ‘letting of immovable property’, because the characteristics of letting (such as the payment of rent) are not present.



Payments of input VAT are therefore normally fully recoverable in respect of such accommodation.