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V1671-22 13 July 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación única

Delivery of land and housing in turnkey contracts deemed a single operation with 10% VAT rate

A developer enquired whether the delivery of land as security and the subsequent delivery of a house built under a turnkey contract constituted a single VAT operation. The DGT ruled that it is a single supply where the housing is the principal element and the land is ancillary, thus applying the reduced rate.

The question raised

Whether said operations constitute a single operation for Value Added Tax purposes, as well as other issues regarding taxation therein, such as the accrual and the applicable tax rate.

The DGT's ruling

The delivery of the land and the future construction constitute a single operation from an economic perspective as they are inseparable. The delivery of the completed dwelling is the principal supply and the prior delivery of the land is an ancillary supply. The applicable tax rate is 10% as they are buildings suitable for residential use. The accrual occurs upon the delivery of the dwelling or at the time of advance payments.

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