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V1407-22 15 June 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · urbanización

Land delivery by a company may be VAT-exempt or taxable depending on urbanisation status

The DGT clarifies that VAT treatment depends on whether the land is rural, undergoing urbanisation or is a buildable plot.

The question raised

The taxation of said transaction for Value Added Tax purposes is raised.

The DGT's ruling

The supply of rural land is exempt from VAT, unless physical transformation works have commenced or urbanization costs have been incurred. If the land is undergoing urbanization or is already a building plot, the transaction is subject to VAT and not exempt. In the event of an exemption, the taxable person may waive it if the acquirer is a taxable person entitled to deduction. If there is a link between the company and the partners, the tax base shall be the normal market value under certain requirements.

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