Skip to content
Back to index
V0583-20 16 March 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · urbanización

Land sales may be subject to VAT if the owner incurs development costs and intends to sell

A landowner wishes to subdivide an urban plot for individual sale. The DGT examines whether the transaction is subject to VAT or Transfer Tax (ITP/AJD), depending on the seller's status as a business entity and the level of land development.

The question raised

Taxation of the operation for the purposes of Value Added Tax and Transfer Tax and Documented Legal Acts, and formal obligations, where applicable, for the purposes of Value Added Tax.

The DGT's ruling

The delivery of land is subject to VAT if the transferor acts as an entrepreneur or professional, which occurs when they organize means to develop the activity and assume the risk, especially from the moment they incorporate urbanization costs into the land with the intent to sell. If the land is undergoing urbanization or is already buildable, the operation does not benefit from the exemption for rustic land. If the operation is subject to VAT, it is not taxed under Transfer Tax/Stamp Duty, unless the delivery benefits from an exemption in VAT.

Book your free first meeting