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V1599-21 27 May 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Possibility of applying passive subject investment via VAT exemption waiver in commercial property purchase

A couple acting as a community of gains seeks advice on whether they can apply passive subject investment in buying a commercial premises if the seller waives VAT exemption. The DGT confirms this is possible if the waiver conditions are met and the buyer has the right to deduction.

The question raised

It questions the possibility of applying the reverse charge mechanism if the seller waives the exemption provided for in Article 20.One, number 22 of the Value Added Tax Law.

The DGT's ruling

If the transfer of a building constitutes a second or subsequent delivery, the seller may waive the exemption provided for in Article 20.One.22 of the VAT Law. To do so, this must be reliably communicated to the acquirer prior to or simultaneously with the transaction, and the acquirer must prove their status as a taxable person with the right to deduction. In this case, the transaction shall be subject to tax and the acquirer shall be the taxable person by means of the reverse charge mechanism.

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