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V2671-14 8 October 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · comunidad de bienes

Allocation of assets from a joint ownership to its members may constitute the first taxable supply for VAT purposes

A query was raised regarding whether the allocation of properties from a joint ownership to its co-owners, and their subsequent sale to third parties, is subject to VAT. The DGT indicates that if the joint ownership acts as a developer by assuming risk, the allocation constitutes a taxable supply of goods, and the subsequent sale will be a second, exempt supply.

The question raised

Question posed: Taxation of the described operation.

The DGT's ruling

If the community of property organizes the means and jointly assumes the risk and venture of the development, it holds the status of entrepreneur and taxable person for VAT purposes. In this case, the allocation of real estate to the community members in proportion to their participation is considered a taxable supply of goods. The subsequent sale of said real estate by the community member to third parties shall constitute a second supply of buildings, which is exempt from VAT.

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