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V1286-20 6 May 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · promoción de viviendas

4% tax rate applies to acquisitions by leasing entities, not to housing development

A developer enquired whether the reduced 4% tax rate could be applied to housing development. The DGT ruled that this rate applies to acquisitions made by leasing entities rather than to the development activity itself.

The question raised

1. Whether the 4 percent tax rate provided for in Article 91.Two.1.6º of the Value Added Tax Law can be applied in the case of housing development.

The DGT's ruling

The 4% rate applies to the acquisition of dwellings by entities applying the special housing lease regime and complying with the requirements of the Corporate Tax Law. In the case of the development of dwellings for subsequent rental, this does not constitute an acquisition, and therefore said rate is not applicable. For construction works of buildings intended primarily for dwellings, the reduced rate is 10% if the property is suitable for dwelling (with a certificate of habitability or a first occupancy license).

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