21% VAT on mortgage search services for self-build projects
The Dirección General de Tributos (DGT) has issued a relevant ruling regarding the taxation of financial intermediation services in the construction sector. The inquiry analyzes the nature of commissions received by companies that manage the search for mortgages for clients involved in self-build projects.
What the DGT has ruled
The body has determined that the provision of mortgage search services for self-build projects constitutes an operation subject to VAT at the general rate of 21 percent. This criterion holds even in cases where the agreed commission includes the amount of loan installments that the inquirer pays on behalf of its clients.
The resolution clarifies that payments made by the company to the banking entity on behalf of the clients are classified as payments by a third party. Therefore, these movements do not generate a VAT-taxable operation between the bank and the inquirer. Likewise, the banking entity is obliged to issue the invoice for the services rendered directly to the builder.
What this means for you
This criterion has a direct impact on companies operating as intermediaries or those facilitating the obtaining of financing for construction company clients. If your activity includes managing mortgage searches within a self-build model, you must apply the 21% tax rate to the total commission earned.
It is fundamental to distinguish between the commission for the intermediation service and the payments made on behalf of third parties, as the latter do not alter the taxable base of the management service, but they do define the invoice structure and the responsibility of the financial entity.
What should be done
Companies in the sector should verify the correct application of the VAT rate on their financial management service invoices. It is necessary to ensure that the distinction between the provision of services and payments on behalf of third parties is clearly reflected in the accounting to avoid errors in the tax settlement. It is recommended to assess the specific situation of each intermediation business model to guarantee compliance with current regulations.
Frequently asked questions
- Is VAT applied to the loan installments paid on behalf of the client?
- No, installments paid on behalf of third parties do not generate VAT between the bank and the inquirer, but the commission for the search service is subject to 21%.
- What VAT rate should the intermediation company apply?
- It must apply the general rate of 21% on the provision of the financing search service.