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V1713-14 3 July 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · unidad económica autónoma

Transfer of a hospitality business is exempt from VAT if it constitutes an autonomous economic unit

A partnership that leases a premises and operates a hospitality business has requested a ruling regarding the VAT liability of its operations. The DGT has determined that the transfer of the business will not be subject to VAT provided that all elements necessary to carry out the activity autonomously are transferred.

The question raised

Subjectivity of the operation for Value Added Tax purposes.

The DGT's ruling

The transfer of a set of elements constituting an autonomous economic unit capable of carrying out an activity by its own means is not subject to VAT. For a hospitality business to qualify for this non-subjectivity, the transfer must include the personal and material elements necessary for the development of the economic exploitation. Non-subjectivity does not apply if it is a mere assignment of assets without an organizational structure.

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