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V0464-20 26 February 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · primera entrega

10% tax rate on new property purchase depends on residential suitability

A professional enquires whether buying a new property for use as an office is exempt from VAT and what rate applies. The DGT clarifies that the first delivery from the developer is subject to VAT, and the 10% rate depends on the property's residential suitability, regardless of its future use.

The question raised

1. Application of the exemption provided for in Article 20.one.22 of the Value Added Tax Law.

The DGT's ruling

The delivery of a newly constructed dwelling by a developer constitutes a first delivery subject to VAT and not exempt. The tax rate shall be 10% if the property is suitable for use as a dwelling, which is evidenced by the certificate of habitability or the first occupancy license, regardless of the professional use to which it is assigned. The right to deduct the tax amount shall depend on whether the asset is assigned to the professional activity, allowing for partial assignment if it is an investment asset.

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