On 30 September 2026, the Supreme Administrative Court (NSA) ruled that perpetual usufruct fees paid by a property developer for land under construction are not direct costs of generating revenue from apartment sales. The developer had argued the fees were directly linked to the specific projects. The NSA upheld the tax authority’s position that such fees are general administrative expenses, deductible only indirectly over time, not directly allocated to individual units sold. The decision interprets Article 15(1) of the CIT Act on direct vs. indirect costs.
Key Takeaways
- Direct Cost Definition Narrowed: Only costs directly attributable to a specific revenue item (e.g., construction materials, labor for a specific building) qualify as direct costs; land-related fees are considered indirect.
- Timing of Deduction: Indirect costs are deducted in the period incurred, not matched to revenue recognition of individual apartments, potentially accelerating or deferring tax deductions.
- Developer Tax Planning Impact: Developers must adjust cost allocation models and deferred tax calculations to reflect the NSA’s restrictive interpretation.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement