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V0236-25 5 March 2025 · SG de Impuestos sobre el Consumo Criterion in force
IVA · retracto legal

Property transfer by legal right of withdrawal may be VAT-exempt or taxable

A company that acquired property by auction must transfer it to a co-owner who has obtained a legal right of withdrawal. The DGT examines whether this transfer is subject to VAT or exempt, depending on whether it involves land or a building.

The question raised

Whether said transfer of the real estate by the consultant to the party exercising the right of redemption shall be subject to, and if applicable, exempt from, Value Added Tax. If applicable, the possibility of waiving the exemption.

The DGT's ruling

The exercise of the legal right of redemption constitutes a new valid transfer of assets following the previous acquisition. If it is land, it shall be exempt if it is rural or not undergoing urbanization, but it shall be subject to tax if it is a building plot or developable land. If it is a building, it shall be a second or subsequent delivery and shall be exempt. The exemption may be waived if the acquirer is entitled to a tax deduction.

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