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V1959-14 17 July 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party applies to land transfer for debt settlement

A company asks whether transferring immovable property given as security for a loan, using part of the proceeds to pay off the debt, allows the application of the passive party's inversion. The DGT confirms this, provided the regulatory requirements are met.

The question raised

Applicability of the reverse charge mechanism provided for in Article 84.One.2.e), third indent of Law 37/1992

The DGT's ruling

The reverse charge mechanism of the taxable person under Article 84.One.2.e), third indent, applies when the acquirer is a business or professional and the delivery is a consequence of the enforcement of the guarantee or the transfer of real estate for the extinction of the guaranteed debt. This includes cases where the acquirer subrogates into the debt or where the price is intended to cancel the loan. It shall not be applicable if the operation is already subject to the reverse charge due to insolvency proceedings or due to the waiver of the exemption under paragraphs 20 and 22 of Article 20.One.

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