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V2709-20 3 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo reducido

Reduced 10% VAT rate applicable to tourist apartment renovations if suitable for residential use

A taxpayer queried whether renovating a building to convert it into tourist apartments allows for the application of the reduced VAT rate. The Directorate-General for Taxes (DGT) ruled that it is applicable provided the apartments possess a certificate of habitability or a first occupation licence and meet all other legal requirements.

The question raised

Application of the reduced tax rate under the Tax Law to the described renovation works concerning tourist apartments.

The DGT's ruling

The reduced rate of 10% applies to construction or renovation works of buildings primarily intended for residential use, provided that at least 50% of the surface area is for such use. For tourist apartments to be considered suitable for residential use, they must possess a certificate of habitability or a first occupancy license and be objectively capable of being used as such. If these requirements are not met, the general rate of 21% shall apply.

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