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V3306-19 2 December 2019 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · declaración de obra nueva

Taxable base for new build declarations is material execution cost, not market value

A query was raised regarding the taxable base for settling Documented Legal Acts (AJD) in a new build declaration. The Directorate General for Taxes (DGT) ruled that the base must be the actual cost of executing the works rather than its market value.

The question raised

What would be the tax base for the purpose of settling the documented legal acts, and whether it would be correct to understand that the actual value of the asset or right would be constituted by the amount recorded for the purpose of settling the municipal license despite complying with the act of registration at a later time.

The DGT's ruling

The tax base in the deeds of declaration of new construction is constituted by the actual cost value of the declared new construction. This value must be that of the material execution of the work, excluding VAT, professional fees, the contractor's business profit, or taxes or public fees. The cost is that which existed at the time of execution; therefore, the timing of accrual is irrelevant and updating the value is not appropriate. This cost cannot be equated with the market value of the completed property.

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