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V2184-17 22 August 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo reducido

Reduced 4% VAT rate applicable to property purchases if rental requirements are met

A leasing company inquired whether it could apply the 4% VAT rate to property purchases in 2017, prior to meeting the requirements for the special Corporate Tax regime. The DGT ruled that this is possible if the intention to use the properties for rental purposes, qualifying for the tax relief, can be demonstrated.

The question raised

Possibility of applying the 4 percent tax rate to the acquisitions of dwellings carried out during the year 2017.

The DGT's ruling

To apply the 4% rate to the acquisition of completed dwellings (including up to two parking spaces), the entity must meet the conditions of the special regime for leasing entities and be entitled to the Corporate Income Tax allowance. Although the company does not yet meet the requirements of the special regime in the year of purchase, it may apply the reduced rate if the intention to dedicate the properties to leasing with entitlement to the allowance is proven. This reduced rate does not apply to dwellings under construction, which are taxed at 21%.

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