A natural person may own a number of sole establishments. There has been uncertainty on whether each sole establishment needs to obtain VAT registration separately or whether all such establishments could be included under one VAT registration.
WHAT IS A SOLE ESTABLISHMENT ?
- It is a legal form of business which is 100% owned by a natural person.
- It does not have a legal personality that is independent of its owner and is accordingly considered to be the same person as its owner.
- It does not apply to a One-Person Company LLC or other similar legal entities, which are seen as distinct and separate legal persons from their owners.
- A legal person (e.g a company) cannot own a sole establishment.
CLARIFICATION ON THE ISSUE
- On the basis that a sole establishment does not have a legal personality that is independent or different from its owner, and that each person can obtain only one VAT registration, it is hereby clarified that a natural person should include all its sole establishments under one VAT registration.
- The VAT registration in such cases should be obtained ideally in the name of the natural person that owns the sole establishments.
- However, if a natural person, owning multiple sole establishments, wishes to obtain the VAT registration in the name of one of its sole establishments, the person may apply to the FTA accordingly.
- The taxable supplies by a natural person, as well as his sole establishment, must be considered collectively in order to determine the VAT registration obligations.
WHAT IF THERE ARE SEPARATE VAT REGISTRATIONS FOR DIFFERENT SOLE ESTABLISHMENTS ?
- The FTA wishes to state that it will review such VAT registrations in certain cases and inform the relevant taxable persons of the corrective steps they should take, if any.
- Any VAT registrations received in the past, no action is required to amend the VAT registrations until specifically directed by the FTA.
- For all future VAT registration applications, the applicants must conform to the position stated in this Public Clarification.
If a natural person owns one or more sole establishments, the value of supplies made by the natural person and all its sole establishments must be aggregated to assess whether the VAT registration threshold has been exceeded.
A natural person owning a number of sole establishments needs to obtain only one VAT registration for all its sole establishments and does not require separate VAT registrations for such establishments.