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V0959-16 10 March 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · permuta

Exchange of a plot of land by a City Council is subject to VAT as a business activity

A City Council has enquired whether the exchange of a plot of land for another owned by a private individual is subject to VAT. The DGT has ruled that the management of public land assets constitutes a business activity and, as there is consideration involved, the transaction is subject to the tax.

The question raised

Liability for Value Added Tax and invoicing of the transaction.

The DGT's ruling

Municipal land assets constitute business assets; therefore, their management is of a business nature. The transfer of a plot by the City Council through a barter transaction is subject to VAT as it is carried out for consideration. The exemption for non-buildable land does not apply because the plots are considered buildable. The transfer from the private individual to the City Council shall be subject to VAT only if the individual acts as an entrepreneur or professional and the plot is used for their business activity.

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