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V2073-24 25 September 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario o profesional

Sale of property subject to VAT only if vendor is entrepreneur and property linked to professional activity

A physical person who registered in the census to rent a premises but decides to sell it asks whether the transaction may qualify for passive investor exemption. The DGT states that VAT applicability depends on whether the vendor is an entrepreneur and whether the property is linked to professional activity.

The question raised

Whether the sale can be carried out under the assumption of the reverse charge mechanism for Value Added Tax.

The DGT's ruling

If the transferor is an entrepreneur or professional and the real estate is used for their activity, the delivery shall be subject to VAT. Otherwise, the transaction shall not be subject to VAT and shall be subject to the Transfer Tax. The commencement of the activity and the use of the real estate for the activity are matters of fact that the interested party must prove with objective means.

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