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V1952-14 17 July 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo

Quality improvements in new-build homes taxed at 10% if included in the sale price

A developer cooperative has requested clarification on the VAT rate applicable to quality improvement works carried out on homes prior to delivery. The Directorate General for Taxes (DGT) has ruled that if these works are considered part of the increased sale price of the property, a 10% rate applies; however, if the contractor invoices the purchaser directly, the 21% rate applies.

The question raised

Applicable tax rate for renovation works and quality improvements carried out by a construction company in dwellings prior to the completion of their construction and delivery.

The DGT's ruling

If the renovations are carried out by the developer in a dwelling pending delivery and are considered an increase in the sale price, they are taxed at 10%. However, if the builder carries out the works for the acquirer and invoices the latter directly, the reduced rate of 10% for contracts between developer and contractor does not apply, but rather the 21% rate. The 10% rate for works requires that the contract be formally executed directly between the developer and the contractor.

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