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V1500-14 9 June 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · unidad económica autónoma

Transfer of an administrative management contract is subject to VAT if it does not constitute an autonomous economic unit

A query was raised regarding whether the transfer of a rural centre's operating business to a local council is subject to VAT. The DGT ruled that the transfer of the management contract, in isolation, does not constitute an autonomous economic unit and is therefore subject to the tax.

The question raised

Whether the transfer of the business to the city council for a certain price is subject to Tax.

The DGT's ruling

For a transfer of assets to be exempt from VAT, it must constitute an autonomous economic unit capable of carrying out an activity by its own means. In this case, the transfer of the administrative management contract does not in itself constitute such an economic unit. Consequently, the transaction shall be subject to Value Added Tax.

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