Back to index
V1327-22 10 June 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario o profesional

Sale of urbanised plots by a business owner is subject to VAT regardless of time elapsed

A business owner involved in land urbanisation has enquired whether the sale of a plot remains subject to VAT after years of inactivity. The DGT has ruled that if there is an intention to sell and urbanisation costs have been incurred, the status of business owner is maintained, and the supply of urbanised land is not exempt.

The question raised

Consideration of the taxpayer as an entrepreneur or professional, or the loss of said status due to the lapse of six years since the last transfer, for the purpose of determining the liability of the sale to Value Added Tax or to Transfer Tax and Documented Legal Acts Tax.

The DGT's ruling

The status of entrepreneur is acquired upon assuming urbanization costs with the intent to sell, and this status is not lost due to the passage of time. The delivery of land undergoing urbanization or already urbanized does not benefit from the exemption provided in Article 20.One.20º of the VAT Law. If the transferor has incurred costs for the physical transformation of the land, the transaction shall be subject to tax.

Book your free first meeting