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V0168-16 19 January 2016 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · unidad económica autónoma

Transfer of business assets may be exempt from VAT

A company asks whether acquiring an autonomous entrepreneur's business assets (material and intangible assets and knowledge) is subject to VAT. The DGT responds that the transaction is not subject to VAT as it establishes an autonomous economic unit.

The question raised

1.) Whether the described operation is or is not subject to Value Added Tax.

The DGT's ruling

The transfer of a set of elements constituting an autonomous economic unit capable of carrying out an activity by its own means is not subject to VAT. The transfer of the premises is not necessary if the activity can continue without them or through a lease. For Personal Income Tax purposes, the sale of inventory is considered business income, whereas the transfer of fixed assets generates capital gains or losses. No withholding tax is applicable to the income from this business activity nor to the capital gains from fixed assets.

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