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V0763-22 7 April 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party not applicable if urban registration encumbrance has lapsed

A developer inquired whether the transfer of land with pending urban encumbrances but with expired registration encumbrance allows the application of the inversion of the passive party of VAT. The DGT responds that this rule does not apply if the registration encumbrance has lapsed due to the expiry of its validity period.

The question raised

Whether the reverse charge mechanism for Value Added Tax provided for in Article 84.One.2.e) of Law 37/1992 shall apply to the transfer of the land.

The DGT's ruling

The reverse charge mechanism for the taxable person under Article 84.One.2.e) third indent of Law 37/1992 applies to the transfer of land subject to urbanization charges when the registration of such encumbrance remains in force. If the registration of the encumbrance has expired due to the lapse of the legal period, this reverse charge mechanism shall not apply. For it to proceed, the expenses must be due and the encumbrance must be in force under the terms of the urban planning regulations.

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