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V1979-18 2 July 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · intermediación inmobiliaria

VAT should not be applied to brokerage or property improvement services located in the Canary Islands

A company sought clarification on whether VAT should be applied to its invoices for the brokerage and improvement of a warehouse in Tenerife, and whether its subcontractors were required to do so. The DGT ruled that these services are not subject to VAT when performed on real estate located in the Canary Islands.

The question raised

Whether the consultant must charge Value Added Tax on its invoices to the entity acquiring the warehouse, as well as whether the subcontracted entities must likewise charge the tax for the operations carried out for the consultant.

The DGT's ruling

Intermediation services in the acquisition of real estate and adaptation services (provided they are not construction or rehabilitation) are considered services related to real estate. As the warehouse is located in Tenerife, the place of supply is the location where the real estate is situated. Since the Canary Islands are excluded from the territory of application of VAT, such operations are not subject to the tax.

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