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V2511-17 5 October 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · condición suspensiva

Transfer of rural property via purchase agreement with a suspensive condition is subject to VAT

A query was raised regarding the VAT and Property Transfer Tax treatment of a rural property sale agreement subject to a suspensive condition. The DGT indicates that the transaction is subject to VAT, although it may be exempt, and analyses the accrual and application of property transfer tax.

The question raised

Taxation under Value Added Tax.

The DGT's ruling

The transfer of rural land by an entrepreneur through a purchase and sale agreement with a suspensive condition is considered a supply of goods subject to VAT. Such supply may be exempt if the land is rural and non-buildable, unless the exemption is waived. VAT is accrued when possession is transferred to the acquirer, but if there are advance payments such as earnest money, the tax is accrued for the amount received. Regarding Transfer Tax, if the operation is subject to VAT, it is not taxed under onerous transfers, unless the supply of real estate enjoys an exemption.

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