Tax Agency: Frequently asked questions about VAT on property rentals

The provision of a deposit as a guarantee in the formalization of a lease contract is not subject to VAT because it is compensatory in nature (its purpose is to compensate for the damages that the lessee could have caused to the lessor in relation to the leased property), therefore the impact of the tax is not applicable (art. 78. Three.1 LIVA ).

Query DGT V2507-19.

No. Compensation is not part of the tax base (art. 78. Three.1 LIVA )

Yes, since it is considered the consideration for a service provided by the tenant consisting of a “non-action” (stopping using the premises).

If the owner is registered in the business census, it is self-consumption and must declare as VAT accrued, the result of applying the tax rate of 21 percent to the cost of the service. of the service, including, where applicable, the amortization of the transferred asset.

Since the price is not agreed upon, VAT accrual occurs on December 31 of each year, so you must declare the corresponding fee in the self-assessment for the last period of the year.

If the owner is not registered in the business census, the free rental of the property does not make him a business owner for VAT purposes, so the transfer will not be subject to VAT. Consultation DGT V0432-20.

Yes. The mere transfer of the rental rights over the premises without being accompanied by the necessary structure of production factors to develop the activity (personnel, furniture, tools...) is subject to VAT and is taxed at 21%.

Consultation DGT V1722-20

It is not subject to VAT in the event that the transferred goods are accompanied by the necessary organizational structure of production factors to develop the business activity by its own means.

Otherwise it will be subject.

Consultation DGT V2368-20

If the liquidation of the entire business assets has not yet occurred , the owner maintains the status of businessman for VAT purposes and the transfer of the premises will be subject to this tax, even if he has filed the declaration of withdrawal from the Census of Entrepreneurs, Professionals and Retainers. Subjection to VAT will entail the possible waiver of the exemption when the acquirer carries out an activity that allows him to deduct, paying the transfer by VAT instead of by the Property Transfer tax.

DGT Query V2802-17

Frequently asked questions in relation to VAT on property rentals

Taxation

Does the deposit provided by the tenant of a premises carry VAT ?

Does the compensation paid by the tenant for termination of the contract include VAT ?

Does the compensation received by the tenant for works carried out on the premises include VAT ?

Does the compensation paid by the owner of the premises to the tenant for the termination of the contract include VAT ?

Should VAT be charged if the use of the premises is transferred free of charge (for example, from a parent to a child)?

Does a transfer in the rental of a premises carry VAT ?

An entrepreneur transfers the entire business except the premises, which is rented to the purchaser. Does the sale of the business carry VAT ?

Once a rental contract has ended, the owner puts the premises up for sale. The sale takes place after submitting the census form (036) for deregistration. Is the transfer subject to VAT or ITP ?