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V1711-22 18 July 2022 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · agrupación de interés urbanístico

Delivery of urbanised plots may be subject to VAT if there is an intention to sell and entrepreneur status

A query was raised regarding the VAT liability of transferring plots and buildings within an Urban Interest Group (AIU) and the deductibility of expenses for Personal Income Tax (IRPF). The DGT indicates that entrepreneur status arises when urbanisation costs are incorporated with an intention to sell, and that for IRPF purposes, additional levies (derramas) are considered improvements to the acquisition cost.

The question raised

1.) Possible liability for Value Added Tax on the transfer or donation of the plots resulting from said urbanization process, as well as on existing buildings prior to the constitution of the Urban Interest Group (AIU), and, where applicable, the applicable tax rate. The form that must be submitted to pay the Value Added Tax, if applicable.

The DGT's ruling

The status of professional entrepreneur for VAT purposes is acquired when urbanization costs are incorporated into the land, provided there is an intention to sell or transfer the plot. The resulting plots shall be subject to the general rate if these requirements are met, including donations for self-consumption. Regarding Personal Income Tax (IRPF), the AIU acts as a fiduciary; therefore, the allocation of land does not generate a tax result if the requirements of Art. 27.1 LIRPF are not met, and additional assessments (derramas) are integrated as improvements to the acquisition price.

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