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V2408-17 25 September 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · urbanización

Land transfers by entrepreneurs may be subject to VAT or exempt depending on urbanisation status

A cooperative in insolvency proceedings has requested clarification regarding the taxation of the transfer of zoned developable land. The DGT clarifies that VAT treatment depends on whether physical urbanisation works have been carried out or if the land is already buildable, and determines the impact on Transfer Tax.

The question raised

Taxation of the transfer of land.

The DGT's ruling

Regarding VAT, the supply of rural land is exempt; however, if the transferor has incurred costs for physical transformation or if the land is already urbanized or developable, the transaction shall be subject to tax and not exempt. If the land is developable (a building plot or with a license), the exemption does not apply. Regarding Transfer Tax (ITP), if the transaction is subject to VAT, it is not taxed under transfer tax, but it is subject to tax on documented legal acts if formalized in a public deed.

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