BASQUE COUNTRY AND NAVARRE: Waiver of VAT exemption on real estate sales

As you may know, second and subsequent transfers of properties (generally those not carried out by the developer) are exempt from VAT. In these cases, the acquirer must pay the Property Transfer Tax (ITP). If the acquirer is a business owner, this tax will result in a higher cost (since ITP, unlike VAT, is not deductible).

Are you a business owner and want to avoid this additional cost?

If this is your case, or that of your company, you can request the seller to waive the exemption so that the acquisition is subject to VAT instead of ITP.

What are the requirements for the waiver?

• The seller must be a VAT taxable person; that is, they must have used the property in an activity subject to VAT.
• Your company must use the property in an activity that entitles it to fully or partially deduct the VAT it incurs (if it is under proration, waiver is also possible).

What are the effects?

With the waiver, the transfer will be subject to VAT, and you, as the acquirer, can deduct that tax (fully or partially).

However, please note that...

You will incur an additional tax that will represent a cost: the Stamp Duty Tax.

Our professionals will explain how the waiver should be carried out.