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V2245-19 20 August 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · arrendamiento de negocio

Leasing of rural land with machinery included may be VAT exempt if no business is transferred

A query was raised regarding whether the leasing of rural plots together with machinery constitutes a business lease subject to VAT or an exempt rural property lease. The DGT has determined that if the object of the contract is the land and its buildings, the inclusion of machinery does not invalidate the exemption, provided that it does not involve the transfer of a business.

The question raised

Whether the transaction must be considered a lease of a business or a lease of a rural estate, which is subject to tax and exempt in the latter case pursuant to Article 20.one.23 of Law 37/1992.

The DGT's ruling

The exemption under Article 20.One.23 of Law 37/1992 for the lease of rural estates only applies to the land and the buildings. If the lease constitutes the transfer of a business (an economic unit exceeding the land and buildings), the transaction shall be subject to the tax. However, the inclusion of machinery or tools alongside the land does not, in itself, determine the non-application of the exemption, provided that the object remains the lease of the land.

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