In Spain, according to the provisions of article 44 of Law 5/2021, individuals or legal entities that acquire a property to use it for their economic activity and include it in their current assets can benefit from the reduced rate of 2% of the Transfer Tax (ITP), instead of the general rate of 7%. This applies to companies acquiring dwellings for subsequent sale or rental, or to be used as a residence for employees.
The requirements to benefit from this reduction are:
a) That the acquiring natural or legal person incorporates this dwelling into its current assets.
b) The acquired property must be transferred within five years of its acquisition with delivery of possession of the property, provided that this transfer is subject to Transfer Tax and Stamp Duty.
In addition to these requirements of the aforementioned law, the Junta de Andalucía required taxpayers to be registered under heading 833.2 of the IAE in the municipality where the company carries out its economic activity. In the absence of such a requirement, the application of this reduced rate could be inadmissible.
However, in a recent procedure of the Regional Economic-Administrative Court of Andalusia, a complaint lodged in the face of such inadmissibility was resolved in a single instance. This concludes that none of the grounds for inadmissibility set out in Article 239.4 of the LGT exist for not applying the reduced rate.
It is also worth mentioning that on 16 November 2023, the Plenary of the Administrative Chamber of the High Court of Justice of Andalusia, Malaga, issued a ruling in which it rectified the criterion up to that time.
In view of this change of criterion of the Administrative Chamber, the Court considers it appropriate to return to the initial criterion, according to which, in order to be entitled to the reduced rate ‘it is not necessary to be registered in the IAE in the municipality in which the property is located’.
Therefore, it seems that this change of criterion, which allows the application of the 2% tax rate without fulfilling the aforementioned requirement, will continue to be the trend that may mark the doctrine of the bodies from now on and without prejudice to the fact that we will remain alert to any change in the regulations or case law that may be applicable or modify the above.
Teresa Romero Navas.
