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V0033-17 4 January 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario

Sale of a building for demolition is subject to VAT and does not qualify for the second-hand building exemption

A query was raised regarding whether the acquisition of a building via auction from a public entity, intended for demolition to allow for new construction, is subject to VAT. The DGT indicates that the transaction is subject to VAT if the transferor is a businessperson or professional acting in the course of their activity; however, the exemption for second-hand buildings cannot be applied as the property is intended for demolition.

The question raised

Treatment of the transaction within the scope of Value Added Tax.

The DGT's ruling

The transfer of the asset shall only be subject to VAT if it is carried out by an entrepreneur or professional in the exercise of their business or professional activity. If the transaction is subject to tax, the exemption for second and subsequent deliveries of buildings provided for in Article 20.One.22 of Law 37/1992 shall not apply, as it does not apply to deliveries of buildings that are subject to demolition prior to a new urban development. In such case, the delivery shall be subject to the general tax rate of 21 percent.

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