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V0544-22 18 March 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IRPF · comunidad de bienes

Sale of plots may be subject to VAT if business activity and asset allocation exist

A community of property has enquired whether the sale of plots should be subject to VAT or Transfer Tax (ITPAJD), and whether the proceeds constitute income from economic activities or capital gains. The DGT indicates that VAT liability depends on whether the community acts as a professional entrepreneur and whether the plots are allocated to said activity.

The question raised

The taxpayer asks whether she is considered a trader or professional for Value Added Tax purposes and whether the transactions carried out will be subject to said Tax or to the Transfer Tax. Furthermore, it is inquired whether the income derived from the sale of real estate will result, for IRPF purposes, in income from economic activities or in capital gains and losses.

The DGT's ruling

For a community of property to be a taxable person for VAT purposes, it must act as a trader or professional through the organization of production factors. If the transaction is subject to and not exempt from VAT, the modality of onerous transfers of assets under the ITPAJD is excluded, although it could be taxed under documented legal acts. For IRPF purposes, real estate development for sale constitutes an economic activity if there is an organization of productive means.

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