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Spain Cuts VAT On New Houses

September 2011 - Tax & Private Client. Legal Developments by Hassans.

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In an effort to revive the country's stagnant housing market and support the construction industry, the Spanish government has announced that it will reduce the rate at which sales tax is applied to the sale of new housing.

The value-added tax (VAT) rate is proposed to be cut to 4%, from 8%, on the sale of newly developed housing to ensure that the industry doesn't further decline. According to the most recent statistics, new house sales have declined by 26% year-on-year, with less than 25,000 homes sold during June 2011. This deterioration in housing sales is even more substantial than when the housing bubble burst in 2009.

A government spokesperson described the measure as 'temporary and exceptional'.

The government has recently announced a number of austerity measures, and is expected to announce further tax changes on August 26 to spur employment.

Spanish authorities already plan to bring forward corporate tax payments by large enterprises, until 2013, to provide a short-term boost to the government's cashflow.

To compensate firms, it has also been confirmed that the maximum number of years that tax credits can be carried forward to offset future losses will be increased from 15 years to 18 years.


For more information please visit www.gibraltarlaw.com 

HASSANS - international law firm