V.A.T increase adopted by The Royal Decree 20/2012 of 13TH july 2.012
1. On 15th of July of 2012 has entered into force the Royal Decree 20/2012 of 13th July, about measures to guarantee the budget stability and promoting the competitiveness, published in the Official Bulletin on 14th of July.
2. The article 23 changes the Act 37/1992 of Value Added Tax (V.A.T). In that sense, the tax rates which have been increased are the following:
2.1. The general tax rate has been increased from 18% to 21%. That tax rate is applicable, among others, for land acquisition suitable for building, developed land or in process of development , land transferred with the building in process of construction or with the construction completed building, which transfer is subjected and not exempted of V.A.T, commercial premises, garages transferred by the Company separately from the house.
2.2. The reduced tax rate has been increased from 8% to 10%. In this sense, we must remember the Fifth Final Provision of Royal Decree Law 20/2011 implementing the tax rate of 4% to the transmission of new houses until 31st December 2012. Since the Royal Decree Law 20/2012 says nothing about it, we understand that the application of 4% could not be extended more. Therefore, since January 1st of 2013, the tax rate of 10% would be applicable for acquisitions of new houses and garages attached to them.
Marbella, July 2.012.
Pérez de Vargas Abogados.