The formula for buying a property and not paying taxes
Before presenting the main novelty brought us 2015 in relation to the possibility to waive the VAT exemption which affects real estate transactions, I think it appropriate to set briefly what the waiver in certain real estate transactions and why it can benefit the taxpayer.
A crucial aspect when addressing investment is its tax cost, ie a price agreed between the parties, how much more will increase the final amount of the transaction. A major fiscal costs, if not the main, comes from the famous Transfer Tax (ITP) in their mode of onerous capital transfers (TPO) levied a large number of real estate transactions.
This heterogeneous indirect tax levied on the acquirer, may actually increase the cost of the operation up to 10% -is the case, for example, in Catalonia; 6% in Madrid the taxpayer can not recover that amount, becoming, therefore, in a final cost for him.
Well, at this point it should be remembered because it is not a novelty in our system of indirect taxation coexist VAT charged on supplies of goods, services and community acquisitions made by entrepreneurs or professionals; and ITP, which taxes the equity civilian traffic.
Coordination between both satisfies the criteria of holding and / or exemption. Thus, the transactions subject to VAT are not subject to ITP, are not subject to VAT are subjected to ITP and operations taxable and exempt from VAT are taxed by ITP. The latter is the case that interests us: the exempt real estate transactions, which are subject to ITP, but in which that exemption is waived.
Made the introduction, by way of illustration, consider a classic transaction that is exempt from VAT: the second and subsequent delivery of buildings. The exemption provided for in the standard for these operations is waived under certain conditions and can thus return to the orbit of VAT.
What does tax on VAT rather than by ITP?
As you know, the VAT is a theoretically neutral tax for the employer (not always, especially in certain sectors such as education or health) because on one hand supports the VAT on the purchase of goods and services, but time charge VAT when is he who provides services or goods delivery. Therefore, if we bear VAT on the purchase of a property we can compensate for that amount of VAT which have passed, or if we did not have sufficient grounds, claim a refund, so neutralizing its effect. On the contrary, if the transaction is taxed by the ITP, the tax paid can not be recovered in any way.
As for the requirements that must be met to waive exemption in relation to persons involved in the operation, both the transferor and the recipient of the operation should be regular or occasional entrepreneurs or professionals, can be natural or legal persons .
In relation to the latter the person acquiring to fit a waiver of the exemption and tax on VAT shall be entitled to full or partial deduction of the tax, or that the goods purchased are to be used wholly or partially in conducting operations that give rise to the right to deduct. Until December 2014, the resignation came only when the taxpayer purchaser was entitled to a full deduction of VAT paid on the acquisition of real estate.
The new regulation extends the personal scope of the waiver because, for example, the waiver could be applied not only in the case where a company acquires buildings to persons other than the promoters to be destined exclusively to the rental of premises (it would be to exempt supplies and the purchaser would be entitled to the full deduction), as would occur with the previous standard, but also when the company acquired the buildings and destined for the rental of premises and housing (in this case would be exempt supplies and the purchaser would right to partial deduction).
Similarly, would the waiver if an individual who has not yet started business, acquired such buildings it were expected to be allocated to rental of premises and homes (it would exempt supply and the purchaser would be entitled to partial deduction).
In short, it is only possible when buying real estate that will be used for an activity giving the right to deduct VAT. Housing, whether you are buying to live (non-business) to rent after no right to deduct VAT prior. It is true that there are special cases in which a company buys homes for rent to another company that go towards hosting their expatriate managers for example, in this exceptional case, buying a home that will eventually be rented for use in housing and other could go VAT rather than transfer tax.
Another recent development in terms of meeting certain requirements to waive the exemption is confirmed by the TS of no need for the waiver of exemption is revealed explicitly.