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V0210-19 31 January 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · promotor

Sale of a property by a company ceasing activity may be subject to VAT

A real estate developer that has filed for tax deregistration has enquired whether the sale of a property it constructed is subject to VAT or to Transfer Tax (ITP/AJD). The DGT rules that the transaction is subject to VAT if the company maintains its status as a taxable person until its assets are liquidated, and further analyses the potential exemption regarding second-hand sales.

The question raised

Subjectivity of the operation to Value Added Tax or to Transfer Tax and Documented Legal Acts Tax.

The DGT's ruling

The status of entrepreneur is not lost merely by the cessation of activity or deregistration from the census if the assets have not been liquidated. The sale shall be subject to VAT if the dwelling forms part of the business assets. If the dwelling was used uninterruptedly by the owner for more than two years prior to the sale, the operation is considered a second supply, being both subject to and exempt from VAT. The regularization of deductions is not applicable as the legal regularization period has elapsed.

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