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V3110-21 14 December 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · exención

Leasing of housing for social programmes may be VAT exempt if the end user is identified in the contract

A foundation sought clarification on whether leasing buildings for social residential services is exempt from VAT. The DGT ruled that the exemption applies only if the contract specifically designates the natural person who will use the housing and prohibits the lessee from subletting or assigning it.

The question raised

Whether the leasing of buildings for the purpose of providing residential services would be exempt from Value Added Tax.

The DGT's ruling

For the residential lease to be exempt pursuant to Article 20.One.23 of Law 37/1992, it must be proven that there is no intention to exploit the asset, but rather to allocate it to the effective use of a specific natural person. Said person must necessarily appear as a user in the lease agreement itself, without the lessee having the power to sublet or designate users subsequently. If the lessee is an entrepreneur or professional and the contract allows for the subsequent designation of users, the transaction shall be subject to tax and not exempt.

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