Back to index
V2277-20 6 July 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · arrendamiento de terreno rústico

Leasing of rural land is VAT exempt, unless livestock facilities are included

A taxpayer has requested clarification regarding the VAT and Personal Income Tax (IRPF) implications of leasing rural land for animal training. The Directorate-General for Taxes (DGT) has ruled that the lease of the land itself is exempt from VAT, but subject to VAT if it involves independent livestock facilities. Furthermore, the ruling analyses the classification of income for IRPF purposes based on the nature of the contract.

The question raised

1.) Taxation of the referred lease in Value Added Tax

The DGT's ruling

The leasing of rural land and agricultural buildings for the exploitation of the estate is exempt from VAT, except if facilities for livestock farming are leased independently of the land. For IRPF, if an economic unit with its own life is leased, it constitutes income from movable capital; if it is isolated land, it may constitute income from economic activities (if at least one person is employed full-time) or from real estate capital. Income from the leasing of isolated rural land is not subject to IRPF withholding.

Book your free first meeting