Selling furnished homes in Spain:  Tax essentials for developers and real estate professionals

Furniture as part of the real estate activity

Including furniture in a property sale usually does not constitute a separate economic activity. An economic activity implies independent organisation of resources for producing or distributing goods or services. For most developers, buying furniture is a marketing measure to enhance a property’s appeal and speed sales, not an autonomous business. Therefore, when furniture is acquired to improve the property rather than for resale, it does not create a separate taxable transaction.

TEAC’s position:

Resolutions in February and September 2023 by the Tribunal Económico-Administrativo Central) (TEAC) – the Central Economic-Administrative Tribunal, Spain’s highest administrative body for resolving tax and economic disputes – confirm that when furniture is not invoiced or sold separately and is not the main object of the sale, it forms part of a single real estate transaction, taxed under the same regime as the property transfer, without separate VAT. Applying VAT to furniture would mean 21%, while first property sales are taxed at 10%. Binding Consultation V0579-24 confirms furniture is subject to 21% VAT only when treated as an independent sale.

VAT and tax on chargeable property transfers (TPO)

In secondary property sales subject to Transmisiones Patrimoniales Onerosas (TPO), which translates to Onerous Property Transfers (or tax on chargeable property transfers), the VAT law allows separating the taxable base only if the goods are clearly distinguishable and valued independently. If furniture is considered an accessory to the property, it does not trigger separate VAT. Therefore, the transaction is taxed under the real estate regime, and including furniture does not alter the applicable tax when not itemised or invoiced separately.

Documentation to avoid risks

To prevent tax risks, all documentation should confirm the furniture forms part of the property. The Sales Deed must state this explicitly, avoiding separate valuation or invoicing. Quotes or internal documents should not itemise furniture, as the Tax Agency could interpret this as a separate sale.

TEAC resolutions and guidance from the Spanish tax authorities confirm that if furniture is not separately valued, no additional VAT applies, particularly in TPO transactions.

Conclusion

Developers selling furnished properties should align both substance and documentation with current fiscal criteria. Properly structured operations, supported by professional advice and clear records, ensure compliance and avoid unnecessary VAT charges.

For resellers who apply the reduced TPO rate on the purchase and then sell furnished properties, these precautions are even more important to prevent the Tax Agency from treating the furniture sale as separate, which would trigger 21% VAT instead of 2% TPO in Andalusia. Hence the importance of being well advised.

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Marta Cabezón is an economist (University of Málaga) with a master’s degree in corporate tax (ESESA). She is a tax and corporate advisor on the Costa del Sol, fluent in English, specialising in international taxation and double-tax treaties, as well as a court-appointed expert in loss-of-profit valuations. Marta is a member of the Official College of Economists of Málaga and the Association of Judicial Experts of Spain.