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V1546-24 25 June 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Land in urbanisation process may be subject to VAT and allow passive investor offset

A company asks whether the sale of an urban plot, subject to urban charges, is VAT-exempt or taxable, and whether the passive investor offset applies. The DGT states that if the land is in urbanisation, the transaction is taxable and the passive investor offset may apply.

The question raised

Whether the transfer of said plot would be subject to and, if applicable, exempt from Value Added Tax. If applicable, whether the reverse charge mechanism of Value Added Tax provided for in Article 84.One.2º.e), third indent, of Law 37/1992 would apply.

The DGT's ruling

The transfer of land under urbanization or urbanized land is subject to VAT and is not exempt. If the plot is subject to a current registration encumbrance due to urban planning charges, the reverse charge mechanism under Article 84.One.2º.e), third indent, of Law 37/1992 applies. This occurs when the transfer is carried out between entrepreneurs or professionals and the charges act as a real security.

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