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V0853-16 9 March 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · sujeto pasivo

Transfer of established urban land is subject to VAT if the entrepreneur is undergoing business liquidation

A company that has not conducted business activities for several years but owns urban land has enquired whether the sale of such land is subject to VAT. The DGT has ruled that the status of taxable person is maintained during the liquidation of business assets and that the sale of established urban land is subject to the tax.

The question raised

Taxability of the transfer of the land and the taxable person for the operation.

The DGT's ruling

The status of taxable person is not lost due to the cessation of activity if the entrepreneur continues to liquidate their assets or dispose of assets used for business purposes. The transfer of urbanized land classified as consolidated urban land is an operation subject to VAT at 21%. If the land is encumbered by a real security right, the reverse charge mechanism shall apply; otherwise, the transferor shall be the taxable person.

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