Occupancy approval

What it means

Occupancy approval is the official procedure confirming that a completed building was built according to its permit, meets technical and safety requirements and may be used for its intended purpose. Under the new Building Act in force since 2025, it results in an occupancy certificate, which replaced the former occupancy decision.

It covers new buildings and changes to buildings, such as extensions, additional storeys or a change of use, for instance when a flat becomes an office or a warehouse a shop. Without it the building may not lawfully be used, and the authority can fine both the owner and whoever uses it.

In some cases early use can be permitted before occupancy approval, for example when only part is finished, or temporary use for a trial run. These permissions are likewise official confirmation of fitness for use, not merely the investor’s consent.

How it works in practice

For the accounts occupancy approval is an important moment. Until a building is fit for use, its costs accumulate as assets under construction and are not depreciated. For buildings, fitness for use is usually shown by occupancy approval or permission for early use, and the building is then put into use.

From then, accounting and tax depreciation begin and the building moves into tangible fixed assets on the balance sheet. For renovations we assess whether the work is a capital improvement that increases the building’s cost or a repair that is expensed.

When a new building is sold, the approval date also matters for VAT: a supply within five years of occupancy approval is generally taxable, while after five years it may be exempt. When planning property sales we therefore track when the five-year period ends.

What to watch out for

The most common mistake is using a building or converted premises without approval, for example when a company turns a warehouse into offices without permission for the change of use. Besides a fine, it can cause insurance problems, as an insurer may refuse to pay for damage to an unapproved building.

Watch depreciation too. If a company starts depreciating a building before approval without permission for early use, the tax authorities may disallow the depreciation. Conversely, needlessly delaying putting it into use after approval means losing deductible expenses.