Tax Agency: Frequently asked questions about VAT on property rentals

The provision of a security as a guarantee in the execution of a lease contract is not subject to VAT for being indemnified the purpose of the (its purpose is to compensate for the damages that the lessee may have caused to the lessor in relation to the leased property), and therefore the tax is not levied (article 78. Tres.1º LIVA).

Consultation DGT V2507-19.

No. Compensation is not part of the tax base (Article 78. Tres.1º LIVA)

Yes, since consideration is given to the compensation of a service provided by the tenant consisting of a "not doing" (stop using the premises).

If the owner is registered in the census of business owners, this is a self-consumption and must declare as accrued VAT, the result of applying the tax rate of 21 per 100 to the cost of providing the service, including, where applicable, the depreciation of the transferred asset.

As no price is agreed, the accrual of VAT takes place on 31 December of each year, and therefore the corresponding self-assessment payment must be filed for the last period of the year.

If the owner is not registered in the census of business owners, the free rental of the property does not make him/her 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 lease rights on the premises without being accompanied by the necessary structure of production factors to carry out the activity (personnel, furniture, tools, etc.) is subject to VAT, and is subject to 21%.

DGT V1722-20 enquiry

It is not subject to VAT if the transferred goods are accompanied by the necessary organisational structure of production factors to carry out the business activity by its own means.

Otherwise, it will be subject.

DGT V2368-20 enquiry

If all the company's assets have not yet been settled, the owner remains a business owner for the purposes of VAT and the transfer of the premises will be subject to this tax, even if you have filed the cancellation declaration in the Census of Employers, Professionals and Withholders. The VAT will result in the possible waiver of the exemption when the acquirer carries out an activity that allows it to deduct, paying tax on the transfer for VAT instead of on the Property Transfer Tax.

DGT V2802-17 Consultation

Frequently asked questions in relation to VAT on property rentals

Taxation

Is the security provided by the tenant of a premises VAT?

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

Is the compensation received by the tenant for works carried out at the premises VAT?

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

Should VAT be charged if the use of the premises is transferred free of charge (e.g. a parent to a child)?

Is a transfer to rent a premises subject to VAT?

A business owner transfers the entire business except the premises, which leases it to the acquirer. does the sale of the business entail VAT?

Once a rental contract has been completed, the owner puts the premises on sale. The sale takes place after the census model (036) of deregistration is presented. Is the transfer subject to VAT or ITP?