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V2189-23 26 July 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo

Improvements to buildings under construction subject to 10% VAT if agreed with the developer prior to handover

A buyer requests improvements (an awning) to a property under construction before taking possession. The DGT has ruled that if these works are agreed with the developer, they are subject to 10% VAT as part of the sale price; however, if contracted directly with a builder or after handover, the 21% rate applies.

The question raised

Applicable tax rate for Value Added Tax purposes regarding the requested improvements to the property to be delivered.

The DGT's ruling

Improvements made by the developer to a property pending delivery are considered an increase in the sale price and are taxed at 10% VAT. If the works are contracted directly by the acquirer with a builder (not the developer), the 21% rate applies. Likewise, the reduced 10% rate for renovations does not apply if the construction did not conclude at least two years prior to the works.

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