Construction Of Data Centre And VAT

VAT is a significant part of the construction cost for a data ­centre and the project should carefully consider how to obtain full deduction of the VAT during the construction phase.

The right to deduct input VAT depends on whether the acquisitions are relevant to and connected with VAT liable activities, cf. the VAT Act Section 8-1. Data centre services are generally considered fully VAT liable according to a binding advance ruling from the tax authorities in 2012 (BFU 25/12). However, data centres can operate in different ways, and this may have different VAT consequences. 

Leases of premises are exempt from VAT, unless the tenant uses the premises in VAT liable activities. If the premises are used in VAT liable activities the landlord may be voluntarily registered for the lease and can add VAT to the lease.