VAT can impact investment returns in several ways, particularly for property and business investments. When you purchase assets subject to VAT, the tax becomes part of your acquisition cost. If you can't recover this VAT (which depends on the nature of the investment and your VAT status), it increases your overall investment cost and reduces your effective return. For income-generating investments, VAT may apply to rental income or service charges, affecting your cash flow.

Most financial investments such as stocks, bonds, mutual funds, and similar securities are exempt from VAT. However, management fees, advisory services, and other related services may be subject to VAT. This means while the investment itself doesn't incur VAT, the costs of managing your portfolio might include a VAT component, indirectly affecting your net returns.

VAT reclamation depends on several factors: your VAT registration status, the nature of the investment, and its intended use. If you're VAT-registered and making investments for business purposes that will be used for taxable supplies, you may be able to reclaim the VAT. However, if the investment relates to exempt activities or personal use, VAT recovery may be restricted or disallowed. Property investments have particularly complex rules regarding VAT recovery.

Property investments have complex VAT rules. Residential properties are generally exempt from VAT, meaning no VAT is charged on the purchase or rent, but also that the seller/landlord cannot recover VAT on related costs. Commercial properties can be subject to VAT if the seller/landlord has opted to tax the property. New builds have special rules, often being zero-rated. The VAT treatment can significantly impact the profitability of property investments, especially when considering renovation costs and ongoing expenses.

The 'Option to Tax' (also known as 'Election to Waive Exemption') is a choice a property owner can make to charge VAT on what would otherwise be an exempt property transaction. Once elected, it typically applies for 20 years and means that VAT must be charged on the sale or rental of the property. The advantage is that it allows the owner to recover VAT on related expenses. This can be beneficial for commercial properties with significant VAT-bearing costs, but it requires careful consideration as it may make the property less attractive to non-VAT registered tenants or buyers.

International investments introduce additional VAT complexities due to varying rules across jurisdictions. The 'place of supply' rules determine which country's VAT regime applies to a transaction. For property investments, VAT is typically applied where the property is located. For services, the rules can be more complex, often depending on whether the service recipient is a business or consumer. Some countries offer VAT refund schemes for foreign investors, but these can be administratively burdensome. International tax treaties may also impact VAT treatment. It's advisable to seek specialized advice for cross-border investments.