MBG News

Labour Accommodation Exempt from VAT

August 10, 2018

The Federal Tax Authority has classified labour accommodation into two categories for tax payment purposes:

  • facility providing additional services making it subject to the standard 5 % Value Added Tax (VAT)
  • residential building and therefore exempt from VAT

The Authority highlighted the importance of accurately determining the type of labour accommodation as it would affect the VAT incurred by the supplier.


  • Principal place of residence for employees.
  • A building fixed to the ground and which cannot be moved without being damaged.
  • The building was constructed with a lawful authority.
  • The building is not similar to a hotel, motel, bed & breakfast establishment or services apartment for which services in addition to the supply of accommodation are provided.
  • Cleaning of commercial areas
  • Maintenance services of the property
  • Pest control
  • Security
  • Utilities, e.g. electricity, water, etc.
  • Access to facilities within the building for residents to use themselves e.g. launderette
  • Facilities within the building (gym, pool, prayer rooms)
  • Telephone and internet access
  • Cleaning of the rooms
  • Laundry services
  • Catering
  • Maintenance services (other than those required for the general upkeep of the property)


If you have any queries or want to know more about it contact us.

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