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V1999-17 26 July 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · unidad económica autónoma

Real estate transfers via merger subject to VAT if they do not constitute an autonomous economic unit

A company has requested a ruling on the VAT treatment of a merger by absorption involving rental properties. The DGT has determined that the transaction is not exempt from VAT if there is no organisational structure in place to constitute an autonomous economic unit.

The question raised

Taxation under Value Added Tax regarding the aforementioned operation.

The DGT's ruling

The transfer of assets in a merger is not exempt from VAT if the elements do not constitute an autonomous economic unit capable of carrying out an activity by its own means. Real estate shall be taxed according to its nature: plots of land are subject to tax and not exempt, unless the technical exemption applies as they are non-deductible investment goods outside the adjustment period. Buildings may be subject to tax or exempt depending on whether they are first or subsequent supplies and the period of prior use.

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