It is, therefore, necessary to consider on a case by case basis whether labor accommodation is:

  • a residential building – Exempt (or zero-rated if the first supply)
  • serviced accommodation – Standard Rated


Labour accommodation as residential property:

Treated as residential buildings where:

  • the building or lodging is occupied by the employees as their principal place of residence
  • it is a building that is fixed to the ground and which cannot be moved without being damaged;
  • the building has been constructed or converted with lawful authority
  • it is not a building that is similar to a hotel, motel, or B&B establishment, or serviced apartment that services in addition to the supply of the accommodation.

Labour accommodation as serviced accommodation:

In certain cases, residents may be provided with additional services on top of the living accommodation. In such cases, it is necessary to consider whether the extent of the additional services provided would move the supply from one of residential accommodation to serviced accommodation. Each scenario must be assessed on its actual facts.

Services normally supplied along with residential accommodation:                 

When additional services are incidental to the main supply of accommodation and not provided for an additional fee, the supply should not normally cause it to become one of serviced accommodation.

Such incidental services may include, but are not limited to, the following:

  • cleaning of communal areas
  • maintenance service required for general upkeep of the property.
  • Pest control
  • Garbage collection
  • Security
  • Utilities
  • access to facilities within the building for residents to use themselves, e.g. launderette facilities, gym, pool, prayer rooms etc.

Additional services indicating a supply of serviced accommodation:

Additional services that indicate that the accommodation is serviced rather than residential include but are not limited to:

  • Telephone and internet access
  • cleaning of the rooms, other than purely the communal areas of the property;
  • laundry services, including regular changing of bed linen
  • catering
  • maintenance service other than those required for general upkeep of the property.


FTA: VAT Public Clarification – VATP003