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V0505-18 22 February 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Purchaser is not a VAT taxable person when buying property in insolvency proceedings without being a business or professional

An individual who is not a business owner acquired new properties in a judicial auction within insolvency proceedings. The DGT has determined that, as the buyer is not a business or professional, the reverse charge mechanism does not apply and the seller must charge VAT.

The question raised

Procedure to follow for the payment of the corresponding tax amount.

The DGT's ruling

The taxpayer's investment in real estate transfers through insolvency proceedings only applies if the recipient acts as a businessperson or professional. If the acquirer is a final consumer, the taxpayer is the insolvent transferring entity. In this case, the transferring entity must charge the tax rate on the invoice and the acquirer must bear it.

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