Promotion of buildings: Economic Activities Tax (IAE) heading 833.2 and its tax implications
Heading 833.2 of the Economic Activities Tax (IAE) covers the activity of building promotion. This includes the purchase or sale of complete or partial buildings in the name and on behalf of the promoter, whether constructed directly or through third parties, with the aim of selling them.
Breakdown of Fees
Fixed fee: €186.61
Variable fee:
- For each square meter of urbanized or parceled land sold: €0.150253.
- For each square meter built or to be built sold:
- In populations of 100,000 or more inhabitants: €1.869147.
- In other areas: €0.811366.
Specific Notes for the Heading
- Collection of the fixed fee: It will always be required, regardless of whether land or buildings have been sold.
- Collection of the variable fee: It will be required upon the formalization of sales, regardless of the type of contract or agreed payment method.
- Annual declaration: The taxpayer must submit an annual declaration within the first month of each calendar year, reporting the square meters sold during the previous year. There is no need to submit a declaration if no sales have been made.
- Cessation of activity: If the activity ceases before January 1, the declaration of the square meters sold during that year must be submitted together with the deregistration declaration.
Common Notes for Group 833
- Official protection housing: If the properties are subject to the legislation of official protection housing, the fee per square meter will be half of the corresponding fee.
- Independence of fees: The fees in this group are independent of those that may correspond to the construction activity.
This heading covers all activities related to the promotion of buildings, including the purchase and sale of urbanized land or buildings, both complete and partial.
Applicable IAE Exemptions
- Individuals: Individuals are exempt from paying the IAE.
- Non-profit entities: Non-profit entities that meet the requirements established in Law 49/2002 are exempt from the IAE.
- Newly created entities: Newly created entities are exempt during the first two years of activity.
Companies with a turnover of less than €1 million: Companies with a net turnover of less than €1 million are exempt from paying the IAE. - Public administrations and autonomous bodies: Public administrations and autonomous bodies of the State, autonomous communities, and local entities are exempt from the IAE.
- Certain agricultural, livestock, forestry, and fishing activities: Agricultural, livestock, forestry, and fishing activities are exempt, except for industrial processing activities.
Application of the Exemption
For those engaged in the promotion of buildings under heading 833.2, it is important to determine whether they meet any of the exemption criteria mentioned. For example:
- If the activity is carried out by an individual, they will be exempt from the IAE.
- If it is a newly created entity, it will be entitled to the exemption during the first two years of activity.
- If the entity has a turnover of less than €1 million, it will also be exempt.
It is crucial to review the specific situation of the company or individual to determine whether any of these exemptions can be applied and thus optimize the tax burden related to the IAE.
Reporting the Volume of Turnover
Who must report?
Those entities that are not exempt from paying the IAE and whose turnover exceeds €1 million are required to report the volume of turnover.
What information must be reported?
The net turnover of the second-to-last fiscal year prior to the year in which the declaration is made must be reported. For example, for the 2024 declaration, the turnover for the 2023 fiscal year must be reported.
When must it be reported?
The volume of turnover must be reported in November of the year prior to the fiscal year in which the tax is due. For example, for the 2024 fiscal year, the report must be made in November 2023.
How must it be reported?
The report is made by submitting form 848, available on the AEAT electronic headquarters.
Procedure
Access and submission:
The form 848 must be submitted electronically through the AEAT electronic headquarters.
A digital certificate or Cl@ve PIN is required for submission.
Required documentation:
The necessary accounting information that accredits the volume of turnover of the second-to-last fiscal year prior must be available.
Practical Example
For a company, whose turnover in the 2023 fiscal year exceeds €1 million and must report for the 2024 fiscal year:
Reporting deadline: November 2024.
Reference period for turnover: 2023 fiscal year.
Importance of Business Groups in Calculating the Fee
It is crucial to consider the existence of business groups in calculating the IAE fee. According to the regulations, if a company is part of a business group, the turnover to be considered is that of the entire group, not just the individual company.
Definition of a Business Group
A business group, for tax purposes, is defined as a set of entities that are controlled directly or indirectly by the same parent entity. This control can be through the ownership of the majority of the share capital or voting rights.
Implications
Consolidated calculation: Companies belonging to a group must consolidate their turnover to determine if they exceed the €1 million threshold, which affects their obligation to pay the IAE.
Declaration: The declaration of form 848 must reflect the consolidated turnover of the business group, not just that of the individual entity.
Practical Example
Suppose a company A, with an individual turnover of €600,000, is part of a group together with company B, whose turnover is €500,000. Individually, neither exceeds €1 million, but together, the group has a turnover of €1,100,000, so they must pay the IAE considering this consolidated figure.
Example of Calculating the Fee to be Paid
To calculate the IAE fee under heading 833.2, we will use the provided values and consider an example with 1000 square meters of building in a population of 100,000 or more inhabitants.
Assumptions
No urbanized or parceled land sold is specified, so we will assume only built square meters.
It is considered that the 1000 square meters are in a population of 100,000 or more inhabitants.
Calculation
Fixed fee: €186.61.
Variable fee for built square meters: 1000 m² x €1.869147/m² = €1869.147
Total fee to be paid: €186.61 (fixed fee) + €1869.147 (variable fee) = €2055.757
Summary
The total fee to be paid would be €2055.76 (rounded to two decimal places).
Conclusion
Complying with the obligation to report the volume of turnover and considering the existence of business groups is essential to avoid penalties and ensure proper compliance with tax obligations related to the IAE. Companies must carefully evaluate their corporate structure and turnover to determine their tax situation and take advantage of any applicable exemptions.
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