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A Municipality has requested clarification regarding the VAT treatment of urban development projects carried out through cooperation. The Directorate General for Taxes (DGT) clarifies that cost reductions resulting from the Municipality undertaking works, compensation for the extinction of rights, and transfers of development rights are not subject to VAT.
This ruling provides legal certainty for developers and local authorities, confirming that certain mandatory urban planning obligations and compensations fall outside the scope of VAT.
The tax team reviews your specific situation.
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