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V0886-22 26 April 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

Transfer of land to a building owner is considered a building supply and may be exempt

A Port Authority has requested clarification on whether the transfer of land ownership and reversionary rights to the current building owner is subject to or exempt from VAT. The DGT has determined that, as the land and the airspace are inseparable elements, the transaction is governed by the rules applicable to the supply of buildings.

The question raised

Whether said transfer would be subject to, and if applicable, exempt from, Value Added Tax.

The DGT's ruling

The transfer of land on which a building is located is not an independent supply of goods, due to the inseparable nature of land and airspace for VAT purposes. Therefore, the rules governing the supply of buildings apply. As the acquirer is not the first owner of the building, the transfer of the land is considered a second or subsequent supply of a building, and the exemption provided in Article 20.One.22 of the VAT Law and its possible waiver may apply.

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