Inseparable technical elements of a project are included in the ICIO tax base

Determining the tax base for the Tax on Constructions, Installations, and Works (ICIO) is a critical aspect in the settlement of building and renovation projects. Recently, the General Directorate of Taxes (DGT) has issued a ruling that clarifies the treatment of technical elements incorporated into an infrastructure.

What the DGT has ruled

The query focused on determining whether certain devices or technical elements intended to be incorporated into a sports center should be included in the tax base. After analyzing the regulations, specifically the Recast Text of the Law Regulating Horizontal Property (TRLRHL RD Leg. 2/2004) and the ICIO rules, the DGT has ruled that those technical elements that are inseparable from the work must be computed for the calculation of the tax.

The criterion establishes that if the incorporation of such elements is necessary for the functionality of the construction, or if their removal would cause damage to the structure or the integrity of the work, they form part of the value of the construction and, therefore, of the tax base.

What this means for you

This criterion has a direct impact on two profiles:

• Companies: Entities executing renovations or construction of facilities must take special care when calculating the cost of the work for the ICIO settlement, including technical components that cannot be decoupled from the structure.
• Individuals: Natural persons carrying out works subject to a planning license must consider that the cost of the integrated technical elements will increase the tax base of the local tax.

What should be done

When executing projects that include machinery, technical installations, or equipment elements, it is necessary to conduct a prior technical and legal analysis. It is fundamental to distinguish between elements that are furniture or independent equipment and those that, by their nature, become an integral part of the building. It is recommended to assess each project individually to ensure that the tax settlement aligns with the technical reality of the work and current regulations.