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V2688-17 23 October 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · licencia de edificación

Transfer of land with building permit subject to 21% VAT

A real estate developer enquired whether the sale of a rural estate for which they hold a construction permit is exempt from VAT. The DGT ruled that, because an administrative permit exists, the land is classified as buildable and the sale is subject to the standard rate.

The question raised

1.- Taxation under Value Added Tax on the transfer of the property prior to the commencement of the building construction works.

The DGT's ruling

The transfer of land with an administrative building permit does not benefit from the exemption applicable to rustic land, and is therefore subject to VAT at the general rate of 21%. If the developer constructs and sells the completed dwelling, it is considered a first delivery of a building subject to the reduced rate of 10%, provided that the accessory land does not exceed 5,000 square meters.

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