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V1034-14 11 April 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución de obras

Reduced 10% VAT rate applies to the construction of residences for people with disabilities

A foundation has requested clarification on the VAT rate applicable to the construction of facilities for people with disabilities (supervised housing). The Directorate-General for Taxes (DGT) has ruled that the 10% rate applies if the building is primarily intended for residential use.

The question raised

Applicable tax rate for the construction works of a residence for persons with disabilities.

The DGT's ruling

The execution of works for the construction of buildings primarily intended for housing is taxed at 10% if a direct contract is formalized between the developer and the contractor. A building is considered intended for housing if at least 50% of its surface area is used for such purpose. In residential centers for persons with disabilities, this criterion applies if the space constitutes their dwelling or center of domestic life, regardless of whether the management is gratuitous or onerous.

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