Recovering VAT from the purchase of a flat in Spain is a complex process that can be affected by a number of factors. To begin with, it should be noted that VAT (IVA in Spanish) is a tax that is charged on a variety of goods and services, including the sale of real estate. The VAT rate for new properties in Spain is usually 10%, while for land the rate rises to 21%.
When a new flat is purchased directly from a developer, VAT is often automatically added to the final purchase price. In such transactions, VAT reimbursement becomes particularly interesting for non-Spanish residents who plan to rent the property or sell it on. In situations where the property is intended to act as an investment, generating income, it is possible to deduct VAT, which can lead to significant financial savings.
In order to be able to successfully claim a VAT refund, it is necessary to have the relevant documentation, including detailed invoices that provide evidence of the VAT paid on the purchase of the property. In the case of a purchase for business purposes, VAT reimbursement may be more easily implemented. For this reason, it is advisable to consult a tax adviser who will be able to explain in detail the more complicated aspects of the regulations and procedures related to VAT recovery.
It is also worth noting that the situation changes in the case of the purchase of a secondary market property, i.e. premises that have previously been used. In such cases, VAT is not charged, and instead, an irrecoverable transfer tax (ITP) is applied. Therefore, those investing in secondary market property need to take into account the various tax aspects associated with this type of transaction.
It should not be forgotten that the VAT recovery process can be time-consuming and requires diligence. A key step is to submit an application to the relevant tax authorities and to carry out an analysis on the use of the acquired property. In most cases, the tax authorities have a certain time limit to process the applications and issue a decision on the status of the VAT recovery. Recovering VAT from a purchased flat in Spain is theoretically possible, but it requires meticulousness and a good knowledge of the legislation. It is worth noting that the successful recovery of VAT involves the collection and proper filing of documentation, as well as an understanding of the detailed regulations. Therefore, it may be beneficial to work with an expert in this field who can help avoid mistakes and take advantage of available opportunities to improve tax efficiency.
