Strata Title Services
Strataworld Pacific is a division of Barrett & Partners specifically established for clients who are seeking a high quality, consistent body corporate management service along with providing conveyancing and land related services.
With such a long history, the firm possesses an extensive knowledge of local regulations, legislation and methods and enjoys close working relationships with the various government ministries, departments and authorities. The firm is well placed to provide valuable guidance and introductions to new investors, who can often be baffled by the myriad of unfamiliar customs and procedures!
Our firm was instrumental in the registration of the first strata titles to be lodged in Vanuatu in February 2005 with Breakas Beach Estate followed by Iririki Island in April 2005.
Since then, strata title has certainly taken off in Vanuatu, with major projects already registered, including Erakor Island Resort and Lapita Plantation Resort (Aore Island, Santo). The trend looks set to continue as high-end development spreads beyond the Port Vila area.
Strataworld Pacific are the Body Corporate Managers for Iririki Island, the largest established body corporate to date with 98 lot owners. As such, we are well able to answer your questions in relation to strata title and body corporate.
Property Purchase in Vanuatu
Strata title purchase is slightly different from the standard transfer of a leasehold title. With strata, transfers are of Lots and fall under the Strata Titles Act which do not require signed consents by the custom owner/government for either transfer or any mortgage. This enables for a quicker transfer.
Our firm is able to assist with your property settlement and to attend to the stamping and registration required to complete the transfer process in an efficient manner.
VAT is 15% and is similar to GST in both Australia and New Zealand. As a potential buyer of a property comprising a Strata Title in Vanuatu we would like to direct your attention to the following VAT matters:
Purchase for Investment
All sales of strata units for investment (where the unit remains as a commercial business) can be treated as a going concern. This means VAT is charged at a rate of 0% on the purchase. A written agreement between the seller and the purchaser must be provided. Every person who purchases an investment unit will be required to register for VAT. Both parties need to be VAT registered at the time of purchase to enable the 0% VAT rate to apply.
Regular VAT returns will be required to be submitted from then on.
If in the future you decide to use the unit for your personal use and it is no longer available as a commercial unit, then VAT at 15% on the current market price will be required to be paid to the VAT office along with applying for VAT de-registration.
If you enter into a pooling agreement, the Agent, who collects all the rental income for the pool, is able to group owners and lodge VAT returns on the group’s behalf. Nomination of the agent to the VAT office in writing is required for the grouping to take effect.
Under a letting agreement the purchasers will be responsible for lodging their own VAT returns. The Agent may however agree to act on purchaser’s behalf and group owners and lodge Group VAT returns.
Purchase for Personal Use
Properties purchased for residential use will be subject to VAT of 15% on the purchase price. This then ceases the VAT liability and no further VAT is payable on future sales.
“Stay in” periods
As part of an agreement with the VAT office, investors that come under a pooling or letting agreement have two periods of 7 days each year in which the owner is entitled to use the investment unit for business related matters. This could for example be for attending the AGM. During these periods all VAT paid on expenses directly related to the running of the unit such as water and electricity will be considered as part of the business and can be claimed back through the VAT return. Proper tax invoices will be required to be submitted in order to do so. VAT paid on “personal” expenses during or after the allowed 7 days period cannot be claimed.
The owner can stay for longer than these two “stay in” periods of 7 days but VAT will not be eligible to be claimed on expenses incurred outside the designated times.
If the Body Corporate of the strata plan earns more than VT4M a year it must register for VAT. If the Body Corporate is VAT registered then it must charge VAT on its body corporate levies.
The owners of properties under the pooling or letting agreement will claim this VAT on the levies back through their VAT returns, which in turn could be completed by the Agent.
We understand this can be a lot to digest and we are more than happy to go through points raised above in more detail with you if needed.
Strata title is gaining more momentum in Vanuatu and is usually easily understood by overseas investors. It is similar to structures in both Australia and New Zealand
For more information on the services that Barrett & Partners can assist you with, please contact us.