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V0854-16 9 March 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · arrendamiento de vivienda

Leasing residential property to a company for employee use is subject to 21% VAT

A company has requested clarification on whether renting a property intended for its employees' housing is exempt from VAT. The DGT has ruled that, as the lessee is a legal entity that subsequently grants use to third parties, the transaction is not exempt and must be taxed at the standard rate.

The question raised

Subjectivity of the transaction to Value Added Tax and, where applicable, the applicable tax rate.

The DGT's ruling

The VAT exemption for the leasing of residential properties is purpose-specific and requires that the use be carried out necessarily and directly by the lessee as the final consumer. If the lessee is a company that subsequently grants the use of the property to its employees, the transaction ceases to be exempt and becomes subject to tax. In this case, the applicable tax rate is the general rate of 21%.

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