Do I Pay VAT on a New Build in Spain?
Yes, new build properties in Spain are subject to 10% VAT (IVA). This replaces the Transfer Tax (ITP) that applies to resale properties.
- 1New builds attract 10% VAT rather than Transfer Tax
- 2Resale properties pay 7% Transfer Tax in Andalusia instead
- 3VAT is paid on completion day at the notary
- 410% VAT plus 1.5% AJD means 11.5% total taxes in Andalusia for new builds
Key Takeaways
- 10% VAT applies to all new build purchases in Spain
- VAT replaces Transfer Tax on new builds
- 11.5% total tax bill in Andalusia (VAT plus AJD)
- Tax is paid on completion day not at reservation or PPC stage
New build properties in Spain are subject to 10% VAT (IVA - Impuesto sobre el Valor Anadido). This is paid on the purchase price at the notary on completion day. New builds do not pay Transfer Tax (ITP) which applies to resale properties and is set at 7% in Andalusia. In addition to VAT, new build buyers also pay AJD stamp duty at 1.5% in Andalusia.
How VAT applies to new build purchases
When you buy a new build property in Spain directly from the developer, the purchase is subject to VAT (IVA) at 10% of the declared purchase price. This is a purchase-stage tax that is unavoidable and must be included in your total buying budget. The VAT rate has been stable at 10% for residential properties since 2012.
New build vs resale tax comparison
Resale properties in Andalusia attract Transfer Tax (ITP - Impuesto sobre Transmisiones Patrimoniales) at 7%. New builds attract VAT at 10% plus AJD at 1.5%, totalling 11.5%. On a 400,000 euro resale property you would pay 28,000 euros ITP. On the same priced new build you would pay 40,000 euros VAT plus 6,000 euros AJD, totalling 46,000 euros. This difference should be factored into new build vs resale comparisons.
When is VAT paid?
VAT on a new build is paid in full on completion day at the notary. It is not paid in stages during construction. Stage payments during construction are subject to VAT on each payment as the payments are made, but the main calculation is based on the full purchase price.
Tax regulations change regularly. This answer is for general guidance only. Always consult a qualified Spanish tax advisor for advice specific to your situation.
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