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V1006-18 18 April 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · arrendamiento con opción de compra

The lease with an option to purchase of rural land shall be exempt from VAT if the subsequent delivery is also exempt

A rural estate owner inquires whether the lease with an option to purchase is subject to VAT and what the taxable base is. The DGT determines that the treatment of the installments depends on whether the future delivery of the land is exempt or not.

The question raised

Whether one holds the status of entrepreneur or professional for Value Added Tax purposes. Whether the granting of the option to purchase is subject to Value Added Tax and, if applicable, what the taxable base would be.

The DGT's ruling

The lease with an option to purchase is a provision of services as long as the option is not exercised or there is no firm commitment, at which point it becomes a delivery of goods. If the delivery of the rural land is exempt because it is non-buildable and indispensable for agricultural exploitation, the lease installments shall also be exempt. If the delivery were subject to tax, the installments would be considered advance payments and would be subject to VAT.

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