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V2714-14 10 October 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución hipotecaria

Awarding of a plot at mortgage foreclosure auction is subject to VAT if the property was used for business activities

An individual has requested a ruling regarding the taxation of a plot acquired at a public auction following a mortgage foreclosure by a property developer. The DGT has determined that the transaction is subject to VAT if the plot was used for the debtor company's business activities and that the taxable person is the entity being foreclosed upon.

The question raised

Taxation of the award operation.

The DGT's ruling

The transfer of an urban plot through forced execution is subject to VAT if the property was used for the business activities of the transferor. As it is an urban plot, the exemption for non-buildable land does not apply. The taxable person for the transaction is the executed debtor entity, as the acquirer does not act as a business owner. The taxable base shall be the total amount of the consideration resulting from the auction award.

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