VAT on buying an office in Dubai: 5% on top of the price — who pays it and who can reclaim it

Yes, buying an office in Dubai attracts 5% VAT on the price. On a AED 4,400,000 office that is about AED 220,000 extra. Residential property is exempt or zero-rated; commercial property is not. A VAT-registered buyer can usually reclaim the tax, while an unregistered private buyer carries it as a cost.

It is the line most often missing from office yield calculations. Here is how it works and when you can get it back.

Why is there VAT on offices but not on apartments?

UAE VAT law (Federal Decree-Law No. 8 of 2017) treats residential and commercial property differently. Sales and leases of commercial property are standard-rated at 5%.

• Offices, shops and warehouses: 5% VAT on sale and on rent.
• New homes sold for the first time within three years of completion: zero-rated.
• Resale and lease of homes: exempt.
• Bare land: exempt.

How much does it add?

Office price	VAT 5%	DLD fee 4%
AED 1,500,000	AED 75,000	AED 60,000
AED 3,000,000	AED 150,000	AED 120,000
AED 4,400,000	AED 220,000	AED 176,000

With the Dubai Land Department registration fee, roughly 9% goes on top of the price. Put it into your entry cost, or the yield you calculate will be overstated.

How is VAT paid on an off-plan office?

Off-plan, VAT is charged on each instalment in the developer's schedule: every payment carries an extra 5%. The tax is spread across the construction period rather than paid in one go at handover.

The offices in Christian A. Rockefeller Business Tower are an example: VAT is paid together with the instalments of its 50/50 plan.

Can you reclaim VAT on an office purchase?

Yes, if the buyer is VAT-registered and uses the office for taxable activity, such as leasing it out. The input VAT on the purchase is then offset against the VAT charged to tenants.

Registration is mandatory once taxable supplies exceed AED 375,000 over 12 months and voluntary from AED 187,500. An unregistered individual cannot recover the tax.

What changes if you lease the office out?

Commercial rent is also subject to 5% VAT, charged to the tenant. For a corporate tenant this is usually not a cost, since it reclaims the tax itself. A registered landlord files returns and pays over the difference.

The practical point: if you are buying to let, plan registration before the deal. Fit-out is the other cost that changes the maths; see our piece on shell and core offices.

FAQ

Is there VAT on buying an apartment in Dubai?

No. A new home's first sale is zero-rated, and resale of residential property is exempt.

Is VAT charged on the 4% DLD fee?

No. VAT applies to the property price, not to the government registration fee.

Can a private investor get VAT back?

Only after registering for VAT and using the office for taxable activity, such as leasing it.

Is VAT due when reselling an office?

Yes. Every sale of commercial property is taxable, including on the secondary market.

Offices for sale and to let, and our market analysis, are in the Dubai offices section.