IVA on New Builds — Spanish Property Glossary

IVA (Impuesto sobre el Valor Anadido) is Spain's value added tax, charged at 10% on new-build residential property purchases. This replaces the transfer tax (ITP) that applies to resale properties. In addition to the 10% IVA, new-build buyers must also pay Impuesto de Actos Juridicos Documentados (AJD, stamp duty) at a rate that varies by region, typically 1% to 1.5%. For properties in the Canary Islands, the equivalent tax is IGIC at 6.5% instead of IVA. Commercial properties attract IVA at the standard 21% rate. IVA on new builds is payable to the developer at completion, who then remits it to the tax authorities. Unlike ITP, which can sometimes be negotiated down through lower price declarations (though this is illegal and risky), IVA is applied to the full invoice amount with no ambiguity. For investment calculations, budget 10% IVA plus 1% to 1.5% AJD on top of the purchase price for any new-build purchase on mainland Spain. This makes the total tax burden for new builds roughly 11% to 11.5%, compared with 6% to 10% ITP for resales.