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V0947-16 10 March 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · expropiación forzosa

Public Administration is a taxable person and must charge VAT on the transfer of urban land following compulsory purchase

A query was raised regarding the accrual, taxable base, and taxable person for VAT in a transaction involving the exchange of land expropriated by a Public Administration. The DGT determines that the Administration acts as a taxable entrepreneur and that the transfer of urbanised land is subject to the tax.

The question raised

The consulting entity questions the moment when the accrual of the tax should be understood to have occurred, as well as the taxable amount and the taxable person for the operations. Additionally, the consequences of the failure to issue a VAT invoice upon the expropriation of the land are questioned, as well as the tax consequences of any possible variation in the value of the developed industrial land that may occur from the date of expropriation until the moment of its delivery.

The DGT's ruling

The expropriating Administration holds the status of a taxable person when developing land, and the supply of developed industrial land is subject to VAT. The barter operation involves two supplies: that of the expropriated land and that of the developed land. The taxable amount is the amount agreed upon between the parties on the date the barter is concluded. If more than one year has elapsed since the accrual without an invoice being issued, the right to charge the tax is lost, although the recipient may accept it voluntarily.

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