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V2722-20 4 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · cesión obligatoria

Transfer of premises via mandatory assignment of development rights subject to VAT if carried out by a business owner

A City Council has enquired whether the transfer of premises (equipment) resulting from the mandatory assignment of urban development rights is subject to VAT. The Directorate-General for Taxes (DGT) has ruled that, as this does not constitute a transfer of land under the Land Law regime, the transaction is subject to VAT provided the party transferring the premises is a business owner or professional.

The question raised

Whether the delivery of said real estate property is subject to Value Added Tax.

The DGT's ruling

The non-applicability of VAT to the mandatory transfer of land to Municipalities is limited to the situation of the distribution of urban development rights between an execution unit and the Municipality. This conclusion cannot be extrapolated to the delivery of a premises resulting from the mandatory transfer of development rights provided for in the Recast Text of the Land Law. Therefore, if the delivery is carried out by an entrepreneur or professional in the course of their activity, the operation is subject to VAT.

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