Skip to content
Back to index
V2605-24 18 December 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · rehabilitación de edificaciones

Property transfer may be subject to VAT if works are classified as rehabilitation

A local council asks about tax implications of purchasing a building to convert into a municipal pool. The DGT explains that if the works are considered rehabilitation, the sale is subject to VAT; otherwise, the operation is exempt, although the taxpayer may choose to waive the exemption.

The question raised

Taxation of the purchase of the property for Value Added Tax purposes and whether, if applicable, the reverse charge mechanism occurs.

The DGT's ruling

If the works meet the rehabilitation requirements of Article 20.One.22.B) of Law 37/1992, the delivery of the property is a taxable and non-exempt operation. If they are not classified as rehabilitation, the delivery is a second taxable and exempt delivery. In the latter case, the seller may waive the exemption if the acquirer is a taxable person with the right to deduction, although the operation of a municipal swimming pool by a city council does not generate a right to deduction.

Book your free first meeting