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V0473-17 23 February 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · permuta

Exchange of a plot of land for future construction by a local council is subject to VAT

A local council transfers a plot of land in exchange for future construction and, following a court ruling, must also receive a sum of money. The DGT has determined that the transaction is subject to VAT as it is carried out in the course of a business activity involving the management of municipal land assets.

The question raised

Treatment of the operation within the scope of Value Added Tax.

The DGT's ruling

The transfer of the land by the City Council is a business operation subject to VAT as it is carried out for consideration. This transfer constitutes a payment in kind on account of the future building, which is also subject to the tax. The accrual of the transfer of the land and the advance payment occurs at the moment the acquirer receives the power of disposal of the plot.

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