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V3255-17 19 December 2017 · SG de Tributos Locales Criterion in force
OTRO · autoconstrucción

Self-construction of a hotel for own use is not subject to Business Activity Tax

A hotel company has requested clarification on whether constructing a hotel on its own land for subsequent operation is subject to Business Activity Tax (IAE). The Directorate-General for Tax (DGT) has ruled that it is not, as the activity is not intended for the production or distribution of goods or services.

The question raised

The taxpayer wishes to know whether said self-construction would be subject to the Tax on Economic Activities.

The DGT's ruling

The construction of a hotel to be used in its own hotel operating activity does not constitute an economic activity for the purposes of the IAE. Although there is an organization of production means and human resources, the purpose is not to intervene in the production or distribution of goods or services, as the sale of the building is not sought. Therefore, there is no obligation to register or to contribute to the tax.

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