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V0889-22 26 April 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · primera entrega

Purchasing a property from a developer following a lease-purchase agreement is subject to 10% VAT

A query was raised regarding whether the purchase of a property from a developer, following a lease with an option to buy, is subject to VAT or Transfer Tax (ITPAJD). The Directorate General for Tax (DGT) ruled that the transaction is subject to VAT as it constitutes a first delivery, and the deed will be subject to Stamp Duty (Actos Jurídicos Documentados).

The question raised

Taxation of the sale and purchase of a dwelling by Value Added Tax or by the Transfer Tax and Documented Legal Acts Tax.

The DGT's ruling

The transfer of the dwelling by the developer is considered a first delivery of a building, as lease contracts with an option to purchase do not exhaust said condition. Therefore, the operation is subject to VAT at the reduced rate of 10%. As it is subject to VAT, the operation is excluded from the transfer tax modality of onerous asset transfers under the ITPAJD, and the deed is taxed under the modality of documented legal acts.

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