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V1237-14 7 May 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · arrendamiento financiero

Transfer of property via exercise of purchase option may be VAT exempt or subject to VAT if exemption is waived

A query was raised regarding whether the acquisition of a commercial premises through the exercise of a purchase option in a financial lease is subject to or exempt from VAT, and whether it is possible to waive the exemption. The DGT explains that taxation depends on the lessor's habitual activity and details the requirements for waiving the exemption.

The question raised

Question raised: A request to determine whether said transaction is subject to or exempt from VAT. If subject, whether the exemption may be waived and the manner in which it should be done, and in that case, how the transaction should be taxed.

The DGT's ruling

Lease with an option to purchase constitutes a provision of services until the lessee commits to exercising the option, at which point it becomes a supply of goods. The transaction shall be subject to tax if the lessor habitually carries out financial leases; otherwise, the exemption for second and subsequent supplies of buildings shall apply. The transferor may waive said exemption if the acquirer is a taxable person entitled to full deduction and this is communicated in an express and reliable manner prior to or simultaneously with the acquisition.

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