AA - 2018

Author:  Johan Greyling – STBB
6 March 2018


The VAT increase coming into effect on 1 April 2018 triggered some tricky questions. One of these is the question what the VAT rate will be in the case of estate agent’s commission payable in respect of a mandate granted to the agent before 1 April 2018, where a sale is completed (all suspensive conditions fulfilled) after this date.

VAT legislation determines that the time of supply is crucially important when deciding on the applicable VAT rate (unless there are exemptions or transition periods). In the commission scenario, there is generally an ongoing supply of services by the agent, that must be apportioned in terms of the transition rules, although the commission is payable on registration of the transfer. Depending on the wording of the mandate agreement, the most transparent way of dealing with the VAT question would be to apply a time apportionment to the calculation. For example, if the mandate was granted on 15 March and a sale completed on 15 April then 50% of the commission carries VAT at 14% and the remainder at 15%.

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