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V1192-17 18 May 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución de obra

Demolition of a building and professional fees subject to 21% VAT

A construction company has requested clarification on the VAT rates applicable to the demolition of a dwelling, the construction of a new one, and professional fees. The DGT has determined that both demolition and professional fees are subject to the standard rate, whereas construction may qualify for the reduced rate.

The question raised

Applicable tax rate for the demolition of the building, for construction works, and for the fees of the intervening professionals.

The DGT's ruling

The demolition of existing buildings does not constitute construction or rehabilitation work, and therefore the reduced rate does not apply. The construction of the new dwelling may apply the 10% rate if it meets the requirements of a direct contract between the developer and the contractor. The fees of the intervening professionals are taxed at 21% as they are not included in the reduced rate.

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