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V1474-19 19 June 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo

Improvements to properties under construction taxed at 10% if invoiced by the developer as part of the sale price

An individual requests improvements to a property that has not yet been handed over. The DGT rules that if the developer carries out these works and they are considered an increase in the sale price, the 10% rate applies; however, if the builder invoices the buyer directly, the 21% rate applies.

The question raised

Applicable tax rate for Value Added Tax purposes regarding improvements requested in the property to be delivered.

The DGT's ruling

Improvements and renovations carried out by the developer in a property pending delivery are taxed at 10% if they are considered a higher sale price, even if invoiced separately. However, if the works are carried out by the builder and invoiced directly to the acquirer (not to the developer), the reduced rate does not apply and they are taxed at 21%. The 10% rate requires that the contract be directly formalized between the developer and the contractor.

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