The temporally modification of the VAT in purchase of New Buildings to reduce it from 8% to 4 % has created continuous doubts in the application of this tax.
So, TLACORP has decided to resume the most Frequently Asked Questions to received from our clients:
From when the new VAT modification is in application?
The reduction of the VAT to the 4 % in new porperties is in application from the 20th of August 2011.
This reduction is not definitive, and will be valid only till the 1st of January 2012, when, if not extended, the VAT will return to the initial 8%.
Partial payments made before the reduction of the application. Is necessary to modify the invoices?
No, invoices for partial payments on account of the final price made before the 20th of August 2011 must be kept on the 8 %. So, these invoices must not be modified.
Invoices dated on or after 20th of August must be include the reduction at 4% till this reduction is in force.
Will this reduction affect to re-sale properties?
Re-sales are not taxed with VAT. They are taxed with another different tax called ITP (Transfer Tax). So, the reduction does not affect resales, as general rule.
This reduction, affects only to permanent residences, or also to Holiday Homes?
This reduction is to ALL type of new properties, independently of the use from the purchasers. So, also acquisitions of holiday homes will be included in the reduction, and will be taxed at 4%. In fact, if in the acquisition of the property, are included garages, or parcking, it will be also taxed at 4%.