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V1711-18 15 June 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · comunidad de bienes

Transfer of property by a community of assets engaged in renting is subject to VAT

A company has enquired whether the sale of a property by a community of assets that rents it for hotel activities is subject to VAT. The DGT has ruled that the transaction is subject to the tax as the community is acting as a business person, although the exemption will depend on whether it is considered a first or second delivery of a building.

The question raised

Question raised: Subjectivity of the transfer to Value Added Tax and the possibility of applying the reverse charge mechanism.

The DGT's ruling

A community of property is a taxable person for VAT purposes if it acts as an entrepreneur or professional in the conduct of an economic activity. The transfer of the real estate shall be subject to the tax, but its exemption will depend on whether the requirements for the first supply of buildings are met. If the building has been used uninterruptedly by its owner for two years or more, it shall be considered a second supply and shall be subject to but exempt from the tax. In the event of an exemption, the taxable person may waive it if the acquirer is a taxable person with the right to deduction, applying the reverse charge mechanism.

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