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V0279-21 17 February 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · exención

VAT exemption on non-buildable land is lost if the transferor has funded urbanisation works or if works have commenced

A public entity has requested clarification on whether the transfer of land classified as non-consolidated urban land is exempt from VAT. The DGT clarifies that the exemption depends on whether material urbanisation works have begun or if the transferor has incurred costs for the physical transformation of the land.

The question raised

Clarification of certain issues contained in the binding ruling of March 22, 2019, inquiry number V0615-19.

The DGT's ruling

The exemption under Article 20.one.20º of Law 37/1992 applies to non-buildable land provided it is not considered urbanized or undergoing urbanization. Land is considered to be undergoing urbanization when physical transformation operations have commenced or the transferor has incurred urbanization costs. If the land requires new urbanization due to changes in planning, it is not considered urbanized unless the new construction process has already commenced.

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