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Postby annabanana » Mon Jan 31, 2011 12:32 pm

This is very big please can any one please explaine how is VAT working in Crete.
We are having a house built and we have some confusion about VAT ,our contract says VAT for matirials is included in build price of 100.000 Euros, but we are laible to pay VAT on builders services. Can anyone explain how this is worked out?
We understand about how IKA is calculated and know how much that will be.
Thank you very much

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Postby Topdriller » Wed Feb 02, 2011 9:59 am

Ah yes, the VAT conundrum. The way it tends to work when building a house is as follows:

1. When you hire in a builder, plasterer, painter etc. they normally want cash in hand and don't particularly want to charge VAT. (This may have changed due to the recent austerity crack downs but I doubt it.)

2. When it comes to paying the IKA payments for the work done i.e. the equivalent of the UK NI payments on wages you don't pay on the actual hours worked. Like most things here there is a written scale (your architect will have copy of it) which lists how much IKA you will need to pay for the plasterer, concrete framer etc.

3. This is where the VAT comes in i.e. the invoices submitted to IKA must also show that the appropriate VAT has been paid - which is a little difficult if like most people you or your developer has followed point one and have paid the supplier in cash with no invoice or VAT added.

4. To get around this conundrum you "buy" invoices off your supplier (or A. N. Other) to the amount required to satisfy the IKA scale. The reason you do this is because the scale is usually considerably lower than the actual cost of doing the job. For example: if the concrete framer cost you €40,000 the VAT percentage due on the number today would be 23% or €9200. However, the IKA scale for doing the concrete framing on a 100m2 house might only be €15,000 so the actual VAT payment due is €3450 i.e. a saving of €5750.

What's more, and somewhat bizarrely, the VAT required by the tax office is not due on everything bought, just the listed items on the scale.

The rules have changed since we built our house and the authorities have tightened up on the VAT scam but the best thing to do is ensure you have copies of all the third party supplier invoices so you can ensure yourself your builder / developer has paid the VAT. If not, then you may get a shock and an unexpected bill for VAT before you move into your house.

It's important to note that you won't be connected to the electricity supply (not to be confused with builder's electricity) until you've got the documentation proving you've paid both IKA and the associated VAT payments.

We finished our house in 2005 so things may have changed since then - and we did not use a developer - but the watchword must be ensure the payments are being made i.e. do not rely on the developer / builder's word.

A good independent lawyer is the best way to do this.

Good luck.

We need men who dream of things that never were.

Posts: 93
Joined: Sat May 08, 2010 6:58 pm
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Postby annabanana » Wed Feb 02, 2011 12:15 pm

Thank you very much fot that ,I think we are going to speak to uor siliciter about this ,thank you againe.


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