Donation of regulated land.

Donation of regulated land.

Question:
Hello!
The EOOD, of which I am the owner, bought UPI in 2003. At that time, this transaction was exempt from VAT and no VAT was charged on the sale of the plot. I would like to give it to my children.
Should I sell the property or can I donate it? Is it possible to donate company property?
If I can donate it, do I owe VAT on the donation as the transaction is now taxable?

Thanks in advance!

Answer:
Hello,
Regarding the VAT payable: The transfer of property rights on the UPR is not an exempt supply.
If you were not a VAT-registered company and did not use a tax credit when you acquired the UPI, now you owe VAT when the asset is written off, sold or donated (Art. 45 para. 5 item 1 of the VAT Act).
If when you bought the plot it was not yet UPI, then no VAT was charged on the purchase. (it is a good idea to check the validity of the reason for not charging VAT when purchasing the UPI). Once it is an RPI that is not adjacent to a building that is not new, VAT is due on sale or donation.
If the acquisition of the UPI was before 01.01.2007 and based on the old VAT law it was an exempt supply and, accordingly, no tax credit was used on this basis, then according to Art. 50, para. 1, item 2 of the current VAT law, the sale or donation of this UPI will be an exempt supply.
Regarding the donation - of course the company can make a donation. For accounting purposes, the asset will be written off as a donation expense. In your case, this donation will not be recognized for tax purposes, as it does not meet the conditions of Article 31 of the Civil Code. Moreover, as a corrective for determining the tax financial result in an increase in the taxable profit, not the accounting value of the UPI, but its market valuation will be taken - the transaction is between related parties.
If you still have doubts, you can benefit from an on-site consultation at one of the territorial divisions of the National Revenue Agency. Every week this can be done on a certain day, according to the schedule of the specific division of the NRA. For your peace of mind, we recommend that you do so.

We hope we have been helpful!
Greetings!