Indirect Taxation Authority Management Board Has Not Yet Adopted the Rulebook: VAT Refund on First Purchased Property on Hold

(Patria) - Due to the fact that inaccurate and incomplete interpretations of the draft Rulebook on Amendments to the Rulebook on the Application of VAT Law in BiH are appearing in the media, related to the realization of the right to VAT refund on the purchase of the first property, the ITA has provided the media with a clarification on the current situation, noting that the Rulebook has not yet been adopted by the ITA Management Board.

"We consider it important to point out the provisions of Article 3 of the Law on Amendments to the Law on Value Added Tax (Official Gazette of BiH, number 20/25), which stipulate that the 'Management Board of the Indirect Taxation Authority of Bosnia and Herzegovina shall adopt bylaws for the implementation of the Law after the entry into force of this Law, which will determine the conditions and manner under which the buyer realizes the right to VAT refund for the purchase of the first residential building, including the competent authorities for issuing certificates proving the fulfillment of conditions for VAT refund, defining the minimum period for the alienation of the residential building by the beneficiary of the right to VAT refund, the area and price of the residential building for which VAT refund is possible, the maximum amount of VAT refund, the number of household members who realize or do not realize the right and to what extent, initial deadlines in terms of owning the first property for the purpose of realizing the right, as well as all other necessary conditions for the implementation of the Law.'

In this regard, we emphasize that this is not about 'derogating the Law' as some interpret it, but we stress that the Law itself has given the obligation to the ITA Management Board to define the aforementioned conditions through the rulebook solely for the purpose of prescribing a procedure that will enable citizens of BiH who realize this legal right to do so. The bylaw aims to make this procedure completely clear, transparent, and to prevent any abuses.

The ITA also clarified the procedure for additional square meters for household members, on which VAT is refunded.

"The draft Rulebook stipulates that the buyer can realize the right to VAT refund for 40 square meters and an additional 15 m2 per household member. The definition of household members has been made with the aim of specifying who are the persons for whom the additional 15 square meters can be used, and not at all for the purpose of denying the buyer the right to VAT refund. If it is determined, for example, that the 'brother' as a household member owns an apartment (property), and the 'sister' is the buyer of a new apartment (and she does not own property or has not owned property in the last 7 years), she will be able to exercise the right to VAT refund, but she will not be able to exercise the right to refund for the additional 15 square meters for the 'brother' as a household member, because he already owns an apartment," states the ITA of BiH.