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V0746-16 25 February 2016 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
ITPAJD · transmisiones patrimoniales

Sale of land not used for business activity is subject to ITP and AJD rather than VAT

An individual engaged in garage rental seeks clarification on whether the sale of urban land not used for their business activity should be subject to VAT or ITP. The DGT rules that, as the land does not form part of the business assets, the transaction is not subject to VAT.

The question raised

Whether the sale of the land should be subject to Transfer Tax or Value Added Tax.

The DGT's ruling

Even if the taxpayer is an entrepreneur or professional for VAT purposes, the transfer of land that has not been used for their activity nor forms part of their business assets is not carried out in the course of said activity. Therefore, the transaction is not subject to VAT and must be taxed under Transfer Tax and Documented Legal Acts Tax (ITP and AJD) as an onerous transfer of assets.

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