A combination transaction is a type of exchange transaction in real estate in which the owner of the land sells part of the land to a developer or contractor in exchange for partial ownership of the buildings that will be erected on the land. For value-added tax (VAT) purposes, this type of transaction is considered to be two separate transactions:

1. The sale of land: The owner of the land sells part of the land to the developer or contractor for the value of the construction services. The VAT on the sale of land will be calculated on the market value of the land.
2. The provision of construction services: The owner of the land hires the developer or contractor to build on part of the land. In exchange for this, the owner transfers to the developer or contractor part of the land he owns. This consideration constitutes income in the hands of the developer or contractor, to which is added the contractual profit generated for it from the construction services it has committed to provide. The VAT on the provision of construction services will be calculated on the cost of the services.

The sale of land and the provision of construction services are two separate transactions for VAT purposes. Each party must provide the other with a tax invoice that reflects the transaction they made. The VAT on the sale of land will be calculated on the market value of the land, and the VAT on the provision of construction services will be calculated on the cost of the services. The VAT must be paid on each transaction separately.

We clarify that the date for taxation of the combination transaction, which changes the above tax events, is the day the transaction is signed. Therefore, sales that are made between and after the transaction, including sales of apartments, are not related to the combination transaction. This means that the value of these sales cannot be retroactively influenced.