Homeowners' associations will not apply VAT to the transfer of energy savings

The management of energy efficiency in buildings is generating new forms of economic compensation. One of these is the transfer of energy savings obtained after the implementation of improvement measures. Given the doubt as to whether this economic movement should be taxed by Value Added Tax (IVA), the administration has issued a decisive ruling on the nature of these operations.

What the DGT has ruled

The Dirección General de Tributos (DGT) has ruled that the transfer of energy savings is not subject to VAT when the party performing it does not hold the status of an entrepreneur or professional. In the case analyzed, the homeowners' association does not carry out a business or professional activity on a regular basis, which places the operation outside the scope of application of the tax.

As there is no taxable economic activity, the association has no legal obligation to issue invoices. However, regulations allow the operation to be documented through other types of documents which, although they do not have the nature of an invoice, serve to certify the transaction carried out.

What it means for you

If you are part of a homeowners' association that has implemented energy-saving measures and decides to transfer said savings, you should take the following into account:

• Absence of VAT: The operation will not generate an additional charge for Value Added Tax.
• Nature of the association: This ruling applies because the association acts as a non-profit entity without its own business activity.
• Documentation: Although commercial invoices are not issued, the association must have documents that support the transfer to maintain transparency in the management of funds.

What is advisable to do

When implementing energy efficiency projects that involve the transfer of savings, it is necessary to verify the legal structure of the association and the nature of the transfer. Each savings situation and its subsequent compensation must be analyzed to ensure that the documentation used is appropriate for the purposes of the association, without incurring tax obligations that do not correspond to its status as non-entrepreneurs.