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V0666-20 2 April 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · unidad económica autónoma

Transfer of a business is exempt from VAT if it constitutes an autonomous economic unit

A customs agent requested clarification regarding VAT exemption and Personal Income Tax (IRPF) treatment following the transfer of their business to a subsidiary company. The Directorate General for Tax Assurance (DGT) states that to avoid VAT, the transfer must constitute an autonomous economic unit and explains the methodology for calculating capital gains for IRPF purposes.

The question raised

1. Possible non-subjectivity to Value Added Tax regarding said transfer.

The DGT's ruling

The transfer shall not be subject to VAT if the set of elements constitutes an autonomous economic unit capable of carrying out an activity by its own means. If there is no organizational structure of production factors that allows for such autonomy, the transfer shall be subject to the tax. For Personal Income Tax purposes, inventories are taxed as income from economic activity, whereas fixed assets generate capital gains or losses based on the difference between the transfer value and the book value.

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