Words and Phrases - "emphyteutic lease"
GST/HST Policy Statement P-174, Emphyteutic Leases, 31 March 1995
Essentially, an emphyteutic lease is a lease whereby the emphyteutic lessor permits an emphyteutic lessee to use the land (and any immovables on it) for a given period of time (not less than 10 years nor more than 100 years) in return for a consideration.
The consideration has two components: (1) monetary consideration as rent (which does not have to be annual); and (2) consideration from the undertaking of constructions or improvements or both which considerably increase the value of the property. At the end of the lease period, all improvements made to the land by the lessee revert back to the emphyteutic lessor (with or without compensation to the lessee for such constructions).
A supply of real property under an emphyteutic lease is considered a supply of real property by way of lease, licence or similar arrangement for GST purposes. The consideration payable in respect of the arrangement includes both the monetary rent and the value of the constructions and/or improvements to the land, as may be applicable.