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V2587-21 22 October 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · reparcelación

Delivery of plots with ongoing urbanisation works is subject to VAT and reverse charge mechanism

A commercial entity has requested a ruling regarding the VAT liability and the taxable person for the transfer of plots following a replotting project. The DGT has determined that, as urbanisation works have already commenced, the delivery is subject to VAT and the reverse charge mechanism applies.

The question raised

Question posed: Whether the delivery of said plots would be subject to and, where applicable, exempt from Value Added Tax. The taxable person for Value Added Tax in the aforementioned deliveries.

The DGT's ruling

The delivery of land undergoing urbanization or already urbanized is subject to VAT when carried out by a taxable person who has incurred physical transformation costs. If the transfer occurs with the current registration status and the urbanization costs are due, the reverse charge mechanism provided for in Article 84.One.2.e), third indent, of Law 37/1992 applies. In the specific case, the status of taxable person falls upon each co-owner independently and not upon the community of property.

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