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V1140-26 20 May 2026 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · régimen especial de agricultura

Farmer with special VAT regime faces general VAT and capital gain on sale of urbanised land

A farmer under a special VAT regime selling land urbanised via a Compensation Board is subject to general VAT and the transaction is treated as a capital gain or loss in income tax.

The question raised

Question posed: Taxation of the transaction under Personal Income Tax and Value Added Tax.

The DGT's ruling

The delivery of urbanized land is subject to VAT under the general regime, as urbanization converts the owner into an entrepreneur. The farmer may maintain their special regime for their agricultural activity as a distinct sector. For Personal Income Tax purposes, if no real estate development activity is carried out, the sale generates a capital gain or loss included in the savings base. The acquisition value shall include improvements from urbanization costs, and the transfer value shall be the actual amount of the disposal.

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What is published here, applied to a company or a specific case. The first meeting is free.

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