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V0758-22 7 April 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · aportación no dineraria

IVT treatment of land contributions depends on whether urbanisation works have started

An real estate company asks about VAT on land and share contributions to a new entity, and subsequent share transfer. The DGT examines whether the land is exempt due to being rural or subject to urbanisation works.

The question raised

Whether the non-monetary contribution of the estates and the undivided share to be made by the consulting entity to entity D would be subject to, and if applicable, exempt from, Value Added Tax. Whether entity D would, if applicable, have the right to deduct the VAT installments incurred as a consequence of said non-monetary contribution. Whether the transfer of shares of Entity D to be made by the consultant to Entity H would be subject to, and if applicable, exempt from, Value Added Tax.

The DGT's ruling

The contribution of land is exempt if it is rural, but it shall be subject to tax if physical transformation works have commenced or if the land is developable. The receiving entity may deduct VAT if it demonstrates the intention to allocate the assets to a business activity. The transfer of shares is, as a general rule, an exempt operation, unless the anti-avoidance clause applies due to the transfer of securities to circumvent real estate tax.

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