Tax Inventive to the construction of dwelling houses…

On March 26, 2015 a law decree with attractive tax incentives was published in support of the construction sector and in order to prevent the increase of prices for dwelling house buyers.

Among others, one of the most noteworthy benefits is one in VAT matter regarding partial construction services of real estate destined to dwelling houses, to mitigate the effect of costs assumed by builders and to encourage the development of current housing supply.

Previously, some construction services of real estate destined to dwelling houses, like the installation of prefabricated houses already benefited from a VAT exemption. However, partial construction services of real estate destined to dwelling houses were not included in such exemption.



In that matter, partial construction services refer to the services regarding hydraulic, sanitary, electrical, iron or aluminum installations, and in general any work contracted by real estate builders with third parties to incorporate or perform these services to real estate and constructions destined to dwelling houses.

This tax incentive contemplates partial construction services destined to dwelling houses as an activity exempted from VAT purposes and, therefore, with the same tax treatment as the sale and construction of dwelling houses. Consequently, taxpayers who engage in such activities will not have to transfer VAT to their clients, provided that certain requirements are met and as long as a notice is submitted every January expressing the decision to take advantage of this benefit.

The tax incentive came into force on March 27, 2015, and during the current fiscal year taxpayers who want to take advantage of it, must submit the corresponding notice, within 15 days of filing the first VAT declaration in which the partial construction services are manifested in the case of entities, and within the following month of providing the first partial construction services when it comes to individuals.

The tax incentives does not apply to partial construction services of real estate destined for any other purposes, such as offices or businesses. It should be noted, that neither the law nor the present decree, establishes any limit regarding the value of the dwelling houses, in order to take advantage of the VAT exemption in its selling, construction or in the partial construction services.

It’s important for ALTIPAT to take care of your wealth and to develop the most convenient tax strategies, so in case you require additional information or orientation in order to apply these and other tax incentives, we invite you to contact us right away.