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A commercial entity has requested clarification on whether the transfer of non-buildable land is exempt from VAT. The Directorate General for Taxes (DGT) has ruled that the exemption applies if the land is rural or if no physical transformation works have begun, but it does not apply if the land is currently undergoing urbanisation or is classified as buildable.
This ruling clarifies the threshold for VAT exemption in land transactions, specifically distinguishing between rural land and land undergoing physical development, which affects tax liability for developers and landowners.
The tax team reviews your specific situation.
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