NEWS

ITP or IVA?

13Jul

 

 

 

 

ACTS SUBJECT TO TAX

  1. Purchase/sale of properties and goods and chattels not subject to VAT
  2. Purchase/sale of properties subject and exempt from VAT, excepting renouncement of the exemption

COMPETENT TAX OFFICE: Where the asset to be transferred is located.

PAYMENT DUE: On the day of the purchase/sale. Unless there be a suspensive condition or reservation of dominion, for example, even though the transfer has taken place despite that the contract is signed

TAX PAYER: The purchasing party

TAXABLE INCOME: The real value of the asset. Declared value subject to verification of value by the Administration. We always advise, prior to the granting of the public deed, to carry out a calculation of the real value.

RATE APPLICABLE IN THE BALEARIC ISLANDS

  1. For property: from 8 to 11%
  2. For furniture: 4%

CASES OF OPERATIONS SUBJECT TO TRANSFER TAX (ITP)

  • A private person sells a land (rural) or a plot (urban), with or without license
  • A businessman sells a land (rural) without license or a land (rural) that cannot be built on (that does not comply with the minimum area of plot).
  • A private person or an entity sells a second hand property (already lived in).

 

PRACTICAL EXAMPLES

  1. Juan sells to Luís a property for 200.000 euros. Subject to ITP on the value of 200.000 euros. 200.000 € x 8% = 16.000 euros, that Luis must pay.
  2. «Palma, SL» sells to «Arenal, SL» a hostal in Palma for 100.000 euros. It is subject and exempt from VAT (2nd transfer), therefore, subject to ITP, to be paid by «Arenal SL». Amount to be paid, 100.000 € x 8% = 8.000 € (What has not been taken into account is the investment of the tax payer nor the total transfer of the patrimony).

 

 

 

 

 

THAT SUBJECT TO TAX: The hand over of assets carried out by businessmen to onerous title in the development of their Business or professional activity.

COMPETENT TAX OFFICE: The state Tax office

PAYMENT DUE: When it is at the disposal of the purchaser, that is, when is purchased or handed over the property, when the total or not of price be paid. Unless there be a suspensive condition or reservation of dominium, for example, even though the transfer has taken place despite that the contract is signed

TAX PAYER: The individuales or entities that hold the condition of businessmen and carry out the hand over of assets subject to the tax.

TAXABLE INCOME:  The price of the property.

TAX RATE: 21% or the reduced rate of 10%, as per explained below. Keep in mind that, if the operation is subject to VAT, it will also be to legal act documents (IAJD), as explained further on.

CASES OF OPERATONS SUBJECT TO VAT

  • The individuales or entities that hold the condition of businessmen that sell a Plot (urban) with or without license, not constructed or under construction (but the building not being completed[1]). This operation is subject to 21% VAT.
  • The individuales or entitities that hold the condition of businessmen that sell a land (rural) with license, having started or not the Works, but as long as they are not completed. This operation is subject to 21% VAT.
  • The individuales or entities that hold the condition of businessmen that sell a Plot or land on which building is taking place but the promotor continues to be the same, that is, that is continues to be the seller who constructs the property. Subject to 10% VAT.
  • The individuales or entities that hold the condition of businessmen or professionals who sell a finished property. This is a first sale and is subject to 10% VAT.

 

RELATION VAT AND LEGAL ACTS TAX (IAJD) IN A PURCHASE/SALE: IN THE OPERATIONS SUBJECT TO VAT, ADDITIONALLY THE IAJD MUST BE PAID.

ACT SUBJECT TO TAX: The deeds, acts and notary declarations

COMPETENT TAX OFFICE: The Tax office of the Balearic Islands

PAYMENT DUE: The day on which is signed the act or contract subject to tax. That is when the public deed of purchase/sale is signed.

TAX PAYER: The purchaser of the asset or right

TAXABLE INCOME: The declared value, without prejudice to the administrative verification.

TAX RATE: In this case, 1,2%

 

 

 

[1] The Tax office considers that a dwelling is completed when the housing certificate has been obtained or the license of first occupation.

 

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