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V1620-19 28 June 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · exención

Leasing residential property to an entity for onward transfer to third parties may be VAT exempt if the end user is specified in the contract

A non-profit association has enquired whether the leasing of a property, which is subsequently transferred to third parties free of charge, is subject to VAT. The DGT has ruled that the exemption depends on whether the lessee acts as the end consumer or carries out a subsequent transfer as part of a business activity.

The question raised

The taxation of said lease in Value Added Tax is raised.

The DGT's ruling

The leasing of residential property is exempt from VAT if the lessee is a final consumer, even if they allow use by other persons. However, if the lessee is an entrepreneur or professional and assigns the property in the course of their activity, the transaction is taxable and not exempt. For the exemption to apply when the lessee is an entity, the contract must specify the particular natural person who will be the ultimate user, without the lessee having the power to designate other occupants subsequently.

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