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V0285-22 15 February 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario o profesional

Sale of a plot of land is subject to VAT if the transferor is a business owner and the asset is used for their business activity

A query was raised regarding whether the sale of a plot of land by a commercial company is subject to VAT or Transfer Tax (ITPAJD). The DGT indicates that VAT liability depends on whether the company holds the status of a business owner and whether the plot is used for its business activities.

The question raised

It questions whether the transferring entity has the status of a businessperson or professional for the purposes of Value Added Tax and whether the transfer of the plot is subject to Value Added Tax or to the Tax on Property Transfers and Documented Legal Acts.

The DGT's ruling

If the transferring company is a businessperson or professional and the plot is used for its activity, the sale is subject to VAT. If the entity is not a businessperson or the asset is not used for the activity, the transaction is not subject to VAT, but could be taxed under ITPAJD. VAT has an exclusive character regarding the modality of onerous transfers of assets under ITPAJD.

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