Skip to content
Back to index
V0471-22 10 March 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · urbanización

VAT treatment of land delivery depends on urbanisation status

A construction company asks about VAT treatment in acquiring developable land from an urbanisation agent. The DGT explains that exemption depends on whether the land is rural, under urbanisation, or already developable.

The question raised

The applicable tax rate and, where appropriate, the exemption that would apply to the acquisition of the aforementioned land for Value Added Tax purposes. The possibility of applying the reverse charge mechanism provided for in the aforementioned Law.

The DGT's ruling

The supply of rural land is exempt from VAT. If physical transformation works have commenced or if the transferor has incurred urbanization costs, the land is considered to be under urbanization and the transaction is subject to the tax. Building land or plots do not benefit from the exemption and are taxed at the general rate of 21%. In the event of an exemption, it may be waived if the acquirer is a taxable person with the right to deduction, allowing for the reverse charge mechanism.

Book your free first meeting