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V0044-18 16 January 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeto pasivo

Sale of plots subject to VAT if intended for business activity is proven

A query was raised regarding whether the sale of plots acquired by an entity is subject to VAT. The DGT ruled that liability depends on whether the entity holds the status of entrepreneur or professional, which requires proving the intention to use the land for business activities at the time of acquisition.

The question raised

Subjectivity of the sale to Value Added Tax.

The DGT's ruling

To be a taxable person for VAT purposes, the entity must act in the course of a business or professional activity. The intention to allocate assets to such activity must be confirmed by objective elements, such as the deduction of input tax. If such intention is proven and the land forms part of the business assets, the transfer shall be subject to VAT. Otherwise, the transaction shall not be subject to VAT and shall be taxed under the Transfer Tax.

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