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V0443-19 28 February 2019 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · derecho de traspaso

Granting of a key money right is subject to VAT as a service provision and constitutes income from economic activities

The query concerns the VAT and Personal Income Tax (IRPF) treatment of an amount paid for a key money right (derecho de traspaso) in a lease agreement. The Directorate-General for Tax (DGT) determines that the key money right constitutes a service provision subject to VAT and, if the lease is part of an economic activity, these amounts are classified as income from economic activities.

The question raised

Treatment of amounts received from the lessee for the establishment of the transfer right in Value Added Tax and in Personal Income Tax.

The DGT's ruling

The granting of a transfer right constitutes a provision of services subject to VAT (general rate of 21%) because it does not involve the transfer of the power of disposal over the business. If the leasing of real estate meets the requirements of an economic activity (employee with a full-time employment contract), both the amount for the transfer right and the rents derived from the lease are considered income from economic activities. In community of property arrangements, these rents are attributed to the members while maintaining the nature of the source.

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