Indirect taxation on the acquisition of hotels in Spain is in a state of considerable legal uncertainty, despite the numerous binding rulings of the Directorate General of Taxes (DGT) which reiterate a solid and long-standing criterion.
The core issue of this debated matter lies in determining when the transfer of a hotel property is subject to VAT and when it is not. If it is not, the acquisition will be subject to Transfer Tax (Impuesto sobre Transmisiones Patrimoniales y Actos Jurídicos Documentados, ITP) in the form of transfer of property for valuable consideration (TPO), which -unlike the case of VAT- entails a significant increase in the cost of acquisition.
Article 7.1 of the VAT Law provides that VAT is not payable on the transfer of a set of items which, forming part of a business or professional asset, constitute or are likely to constitute an autonomous economic unit of the transferor. For its part, the law regulating transfer tax (ITP) establishes that supplies of real estate forming part of business or professional assets, the transfer of which is not subject to VAT, are subject to this tax.
The legal uncertainty to which we refer is caused by the very concept of “autonomous economic unit” introduced by the Spanish legislator in Law 4/2008, of 23 December, in adaptation of the ruling of the Court of Justice of the European Union of 27 November 2003 (case C-497/01 Zita Modes Sàrl), whose definition and subsequent interpretation by European case law has not been free of a certain ambiguity. This situation is aggravated by the disparity of criteria between the DGT and some regional tax administrations as regards the consideration of the parts of a hotel business that can be jointly classified as an autonomous economic unit.
For this purpose, it should be remembered that the DGT has in several rulings given a very relevant value to human resources, understanding that without these, a hotel economic activity as a going concern is not viable in an autonomous manner. This issue is fundamental in transfers of hotel real estate when there is an industrial lease in force in favor of a third party, which operates the establishment with the corresponding organizational structure, with the assets and rights inherent to the business and also -and above all- with its own human resources.
In its recent binding ruling V0197-25, dated 19 February 2025, it once again addresses this issue and maintains its criterion, according to which a hotel can be considered an autonomous economic unit if its transfer includes not only the real estate, but also other resources and assets that allow the exercise of the economic activity by its own means already at the transferor’s premises.
This criterion of the DGT has already been confirmed by the Central Economic Administrative Court (TEAC) in several of its rulings, including those of 21 November 2022 and 21 October 2020. The latter, moreover, establishes that this doctrine is also applicable to the Canary Islands General Indirect Tax, as its regulations reflect those of VAT in this matter.
On the other hand, some regional tax administrations, competent to settle and collect the ITP, are adopting a different interpretation, according to which the transfer of the hotel property with a license would be sufficient to understand that these elements are sufficient to constitute an autonomous economic unit, to conclude that the operation is not subject to VAT and, therefore, to demand payment of the ITP. These administrations are basing their criteria on the Supreme Court ruling of 30 May 2016. Although it is true that this ruling includes some statements regarding the sufficiency of the property and its licenses for classification as an autonomous business unit, the factual situation on which this ruling is based is not the most suitable for establishing a general doctrine in this regard, as seems to be demonstrated by the fact that the DGT and the TEAC, despite the years that have passed, have not adopted the criteria of the aforementioned ruling in their doctrine.
This disparity of criteria generates considerable legal uncertainty for investors in the hotel sector. The lack of a clear legal definition and uniform interpretation of what constitutes an autonomous economic unit in this important sector is causing the coexistence of disparate tax settlements depending on the autonomous community in which the hotel establishment is located and, on occasions, the assumption of a very high and initially unforeseen tax cost.
As a curiosity, it should be remembered that the ultimate origin of the Sixth Directive’s inclusion of the non-taxation of what we now call the autonomous economic unit was precisely the aim of avoiding the excessive financial burden -albeit temporary- that the charging of VAT quotas to the acquirer in transfers of companies or businesses would entail, given that their transactional value is usually very high. However, as mentioned above, in some Autonomous Communities the effect is quite the opposite of the original purpose of the rule.
Therefore, in the absence of a rule or case law that definitively clarifies the issue, and despite the DGT’s reiterated doctrine, it is advisable that each hotel purchase and sale transaction be analyzed in detail, in view of the facts, court rulings and the criteria of the competent regional administration depending on the territory in which it is located.
Head of Tourism and Hotels industry
