Furnished housing cooperatives must apply 10% VAT

The nature of the services provided by housing cooperatives, especially those under cohousing models, has been subject to analysis by the Tax Administration to determine the applicable Value Added Tax (IVA) treatment.

What the DGT has resolved

The Dirección General de Tributos (DGT) has clarified that the transfer of use of housing that is furnished and includes complementary services of periodic cleaning and dining is subject to the reduced VAT rate of 10%. In this scenario, the Administration distinguishes the nature of the services: while biweekly cleaning is considered an ancillary element to the transfer of use, the dining service is treated as an independent provision.

Conversely, if the transfer of use is carried out on housing that is not delivered furnished, the tax treatment changes, resulting in an operation that is taxable but exempt from this tax. This criterion is based on Law 37/1992 on VAT and Law 58/2003 General Tax Law.

What it means for you

For cooperatives managing these types of assets, this criterion establishes a clear obligation in the settlement of the tax. The presence of furniture and additional services transforms the nature of the operation compared to the exemption that could apply to unfurnished housing.

For the members of these cooperatives, this change in criteria has a direct impact on the cost structure. By applying the 10% rate, the final cost of the transfer of use service will reflect this tax burden, affecting the budget allocated to the maintenance and use of the housing.

What should be done

It is necessary to analyze the composition of the transfer of use contracts and the furnishing of the homes to ensure that the applied tax rate is correct. The distinction between what is ancillary (cleaning) and what is independent (dining) is key to the correct tax management of the cooperative. It is recommended to evaluate each business model and the configuration of services to avoid errors in the application of the tax.