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V0863-14 28 March 2014 · SG de Impuestos Patrimoniales, Tasas y Precios Públicos Criterion in force
IVA · sociedad de gananciales

VAT applies to the allocation of dwellings following building renovation within a community of property

A taxpayer inquired whether the allocation of dwellings from a community of property to their individual estate, and the subsequent sale, is subject to VAT or Transfer Tax (ITPAJD). The Directorate General for Taxes (DGT) ruled that the allocation constitutes a first supply of goods subject to VAT, whereas the subsequent sale is a second supply exempt from VAT but subject to Transfer Tax.

The question raised

Question posed: Whether the sale of the referred dwelling, considering that it has not been used, rented, or occupied since the renovation, would be subject to Value Added Tax, on the understanding that there has been no transfer with the allocation from the community property regime to the individual assets of the taxpayer, or whether it would be subject to the onerous property transfers modality of the Tax on Property Transfers and Documented Legal Acts, by considering the transfer of the dwelling from the community property regime to the individual assets of the taxpayer as the first transfer and, therefore, the transfer from the taxpayer to the third party as the second transfer.

The DGT's ruling

The allocation of renovated real estate by a community property regime to the spouses is considered a first delivery of goods subject to VAT. The subsequent transfer made by the allocating spouse to a third party is considered a second delivery of buildings, which is subject to and exempt from VAT. As it is a VAT-exempt delivery, the subsequent sale is subject to the onerous property transfers modality of the ITPAJD.

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