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V2872-17 7 November 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · patrimonio público del suelo

Sale of rural plots by a local council is taxable but exempt from VAT

A local council enquired whether the sale of municipal plots equipped with infrastructure for livestock farming was subject to VAT. The DGT ruled that, as part of business assets, the transaction is taxable, but remains exempt if the land is rural or non-buildable.

The question raised

Liability for Value Added Tax on the disposal of these plots.

The DGT's ruling

Municipal land assets constitute business assets; therefore, their transfers are business activities subject to VAT if carried out for consideration. However, the supply of rural or non-buildable land is exempt pursuant to Article 20.One.20º of Law 37/1992. This exemption does not apply if the land is urbanized or undergoing urbanization. The taxable person may waive the exemption if the acquirer is a taxable person with the right to deduction.

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