Skip to content
Back to index
V0081-14 16 January 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · urbanización de terrenos

Delivery of developed urban plots by a local authority is subject to VAT

A local authority consulted whether the exchange of two developed urban plots for another piece of land was subject to VAT. The DGT ruled that, because the development was carried out for the purpose of sale or transfer, the local authority is acting as a business entity and the transaction is subject to the tax.

The question raised

Liability for Tax regarding the transfer carried out by this City Council.

The DGT's ruling

Public entities carry out business activities when they transfer plots that have been urbanized by themselves. As these are building plots or developable land, the operation cannot benefit from the exemption for non-developable land. Therefore, the transfer of said land by the City Council is subject to VAT.

Book your free first meeting