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V1724-22 20 July 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party applies to transfer of mortgaged property to extinguish debt

A company asks whether acquiring land by extinguishing the debt on the property allows the application of the inversion of the passive party. The DGT responds that this mechanism applies if legal requirements are met and no exceptions apply.

The question raised

Whether the reverse charge mechanism provided for in Article 84.One.2.e) of the Value Added Tax Act would be applicable.

The DGT's ruling

The reverse charge mechanism shall apply to the taxable person pursuant to Article 84.One.2.e) of the VAT Act when the transfer of the real estate is carried out in exchange for the discharge of the guaranteed debt or the obligation to discharge it by the acquirer. For this purpose, the recipient must be a business or a professional and the transaction must be a transfer of real estate held as security for a principal obligation. The mechanism applies provided that the legal exclusions, such as insolvency proceedings or specific exemptions, do not apply.

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