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V2567-18 19 September 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · empresario o profesional

Handover of a building for demolition is subject to VAT if the transferor is a businessperson or professional

A company has enquired whether the handover of a building for demolition, in exchange for receiving a residential property and commercial premises following new construction, is subject to VAT. The DGT has ruled that the transaction is subject to the tax if the transferor is a businessperson or professional, and the demolition exemption does not apply.

The question raised

Liability for Value Added Tax on the delivery of the referred building for its demolition.

The DGT's ruling

The delivery of the building for its demolition shall be subject to VAT if the transferor is a businessperson or professional and the requirements of Article 4.One of Law 37/1992 are met. This delivery does not benefit from the exemption provided for buildings subject to demolition prior to a new development. Furthermore, said delivery constitutes a payment in kind on account of the future building, which implies that the tax accrues at the time of collection of said advance payment.

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