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V2464-20 20 July 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · unidad económica autónoma

Transfer of developable land may be subject to VAT or exempt depending on the stage of development

A real estate company sought clarification on whether the allocation of its developable land to a partner during liquidation was subject to VAT. The DGT explains that liability depends on whether an autonomous economic unit is being transferred or if the land has already undergone physical transformation.

The question raised

Liability for Value Added Tax on the transfer of developable land to the participating company, upon the dissolution and liquidation of the consulted participating company.

The DGT's ruling

The transfer of company assets is subject to VAT if it does not constitute an independent economic unit. Regarding land, if no material works of physical transformation have been initiated, the supply of non-buildable land may be exempt. If urbanization costs have already been incurred or works have commenced, the land is considered to be in the process of urbanization and the supply shall be subject to the tax.

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