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V0473-20 27 February 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Subject passive investment only applies if exemption is waived in rural land transfer

A company asks whether subject passive investment applies in purchasing rural land and whether VAT is deductible. The DGT clarifies that this mechanism depends on whether the land is buildable or rural, with waiver of exemption.

The question raised

Obligation to apply the reverse charge mechanism and, in such case, whether the Value Added Tax paid in the transaction would be deductible.

The DGT's ruling

If the land is buildable, the transfer is subject to and not exempt from tax, with the seller being the taxable person without the reverse charge mechanism. If the land is rural or non-buildable, the transaction is exempt, but if such exemption is waived, the acquirer shall be the taxable person through the reverse charge mechanism. The right to VAT deduction will depend on whether the destination of the asset generates taxable transactions, such as the leasing of industrial warehouses.

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