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V0296-20 7 February 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · arrendamiento de negocio

Leasing of an agricultural holding with a production licence is subject to VAT as a business lease

A farmer inquired whether the leasing of their holding, which includes land, woodland, an irrigation system, and a citrus production licence, is exempt from VAT. The DGT determined that, as it includes elements constituting a pre-existing and consolidated agricultural activity, the transaction is a business lease subject to the standard rate.

The question raised

Taxation of the transaction under Value Added Tax.

The DGT's ruling

The exemption under Article 20.One.23 of Law 37/1992 for the lease of agricultural land and buildings does not apply when a business or economic unit is transferred. If the lease includes elements that allow for the maintenance of a pre-existing agricultural activity, such as a plantation in production and the necessary license for its exploitation, the transaction is considered a lease of a business. In this case, the transaction is subject to VAT at the general tax rate.

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