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V2145-19 13 August 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · suelo urbano

Sale of urban land by an entrepreneur may be subject to VAT rather than Stamp Duty

A company dedicated to the exploitation of rural estates has enquired whether the sale of an urban plot is subject to VAT or Stamp Duty (ITP/AJD). The DGT has ruled that if the plot is used for business activities and does not benefit from an exemption as rural land, the transaction is subject to VAT and is excluded from Stamp Duty.

The question raised

Liability of the sale of the plot to Value Added Tax or to the onerous transfer of assets modality of the Transfer Tax and Stamp Duty.

The DGT's ruling

The supply of land by entrepreneurs is subject to VAT, unless it is non-buildable rural land indispensable for an agricultural holding. If the land is urban or is in the process of urbanization because the transferor has incurred physical transformation costs, the operation is subject to VAT and not to Transfer Tax (ITP). In the event that the transfer is subject to VAT, the variable rate of Stamp Duty (AJD) may be applied in a public deed.

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