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V2570-21 21 October 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · crowdfarming

Product delivery via adoption is the principal transaction and advance payments are subject to VAT

A crowdfarming company has queried whether the adoption of productive units and the subsequent delivery of products constitute distinct taxable events. The DGT has determined that the delivery of products is the principal transaction and all other acts are ancillary, and that payments made for adoption are advance payments subject to VAT.

The question raised

Whether the "adoption" of the productive unit, the collection, packaging and delivery of the products obtained and, where applicable, the transformation thereof, constitute different taxable events for Value Added Tax purposes, or whether they all constitute a single operation with three differentiated payments. Furthermore, the taxpayer wishes to know the place of supply of the operations and the applicable tax rate for both the deliveries to customers and the mediation services provided by the taxpayer to the producers.

The DGT's ruling

The delivery of products by producers is the principal operation, therefore the other derivative operations are ancillary in nature and follow its tax regime. Payments made for the adoption of the productive unit constitute advance payments that accrue tax at the time of collection. The applicable tax rate shall be that corresponding to the delivered good. The mediation services provided by the taxpayer to the producers are considered the provision of services taxed at 21%.

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