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V1146-18 7 May 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · cesión de remate

Assignment of auction surplus after a failed auction constitutes a single property transfer for VAT purposes

The applicant asks whether the assignment of the surplus from a mortgage foreclosure constitutes a first or second delivery of a building and if it is an exempt financial transaction. The DGT rules that if the auction is declared void, the assignment is a single transfer, and that the assignment of the surplus with a premium does not constitute an exempt financial transaction.

The question raised

The consultant requests clarification regarding the binding ruling of September 4, 2017, under inquiry number V2204-17, as to whether the assignment of the bid constitutes a first or second delivery of a building in said cases. Furthermore, it is questioned whether the assignment of a mortgage loan bid can be considered a financial transaction subject to and exempt from Value Added Tax.

The DGT's ruling

If the executing party does not participate in the auction because it is declared void and assigns the adjudication to a third party within the twenty-day period, there is a single transfer for VAT purposes. Conversely, if the executing party participates in the auction and subsequently assigns the bid, there are two transfers. Regarding the financial exemption, the assignment of the bid with a premium is not exempt because the recipient is a third party unrelated to the financial relationship and not the borrower.

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