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V1686-18 13 June 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

Transfer of housing following termination of a deferred access contract is considered a first supply subject to VAT

A non-profit entity has requested clarification regarding VAT taxation when a third party subrogates into a deferred access property contract or when the contract is terminated. The DGT clarifies that the tax liability arises upon taking possession and that the termination of the contract does not render the subsequent transfer a second exempt supply.

The question raised

1. Taxation of the transaction for Value Added Tax purposes when a third party subrogates into the position of the original assignee and the consultant executes the corresponding deed of transfer of ownership in favor of the latter once the price has been satisfied.

The DGT's ruling

The accrual of VAT in sale contracts with a retention of title clause occurs upon placing the asset in the possession of the acquirer. If the contract is rescinded, a corrective invoice must be issued and the tax amount must be rectified in the corresponding return, refunding the amount to the recipient. The use of the building by the original assignee in a rescinded contract does not count towards considering the subsequent transfer as a second exempt delivery, as this constitutes a first delivery subject to VAT.

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