I owe this thought provoker to my old friend Marc Quatember, a Director of Maximus Wealth Managment.

He had drawn up an Estate plan and included Executors’ fees of 4.025% which I queried. He responded that it was 3,5% + VAT.

So, that raised the question “When should an Executor charge VAT on fees?”

If he (my apologies ladies, but writing his/her etc. is just too cumbersome) has been appointed in his own capacity as an individual and is not VAT registered, then his practice (or employer) will not invoice the fees, and he will not charge VAT.

If he is VAT registered, or is appointed in his capacity as the representative of his practice (or employer) which is VAT registered then special rules apply.

If the deceased was not VAT registered, then the executor adds VAT to his fees.

If the deceased was VAT registered, then

1. The executor includes VAT in the 3,5% fee on the proceeds of any assets that are sold, including VAT, by the estate.
2. The executor adds VAT to his fee on any assets or income which are sold or realised exclusive of VAT.

My source is SARS VAT 413 Guide for Estates.