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V0171-14 27 January 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · unidad económica autónoma

Reversion of property due to consortium liquidation is not deemed a transfer of an economic unit for VAT exemption purposes

A university consortium in liquidation has requested a ruling on whether the reversion of property to the contributing local authority is exempt from VAT as a transfer of an economic unit, and how it is taxed under ITPAJD. The DGT has determined that this constitutes a mere transfer of assets without an organisational structure and has analysed the ITPAJD exemption applicable to the local authority.

The question raised

1. Taxability of the reversion operation for Value Added Tax. 2. Taxation of the operation under the Tax on Transfers and Documented Legal Acts.

The DGT's ruling

The reversion of real estate does not constitute a transfer of an economic unit exempt from VAT, as a structure of organizational, material, and human resources that allows for an autonomous activity is not proven. If the operation were subject to tax, the delivery of buildings after two years of use would be considered a second taxable and exempt delivery. In ITPAJD, the operation is neither an onerous transfer nor a corporate operation, but the deed is taxed under documented legal acts, although the city council is entitled to subjective exemption.

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