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V0910-22 28 April 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · autoconsumo de bienes

Consumption by homeowners subject to VAT if use changes from sale to rental

An real estate entity asks whether delivering homes built for sale to its partners, or changing their purpose to rental, has VAT implications. The DGT states that consumption by change of classification is subject to VAT and explains how to regularise deductions.

The question raised

Question raised: Liability and, where applicable, exemption from Value Added Tax for both options and, where applicable, the taxable base of the Tax.

The DGT's ruling

The allocation of real estate to the members of the entity in the event of dissolution is considered a supply of goods subject to VAT. As a related-party transaction exists, the taxable base shall be the normal market value if the recipient is not entitled to deduction. On the other hand, the free provision of housing to the partners is considered self-consumption of services, which is subject to but exempt from VAT. If the intended use changes from sale to lease before entering into operation, the adjustment of deductions is carried out through the self-consumption itself.

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