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V2886-19 21 October 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · permuta

Exchange of rural land for urbanised land may be subject to VAT if exemption is waived

A company acquires rural land and, as payment, will deliver an urbanised plot after bearing the urbanisation costs. The DGT indicates that the delivery of rural land is initially exempt, but may be subject to 21% VAT if the exemption is waived, constituting a payment in kind.

The question raised

Taxation of the transaction for Value Added Tax purposes.

The DGT's ruling

In a swap of rural land for urbanized land, the delivery of the rural land is exempt from VAT pursuant to Article 20.One.20º, unless the taxable person waives the exemption. If the exemption is waived, the delivery is taxed at 21% and the acquirer is the taxable person via the reverse charge mechanism. This delivery constitutes a payment in kind on account of the future delivery of the urbanized land, which is subject to and not exempt from VAT. The taxable base of the payment on account shall be the agreed consideration and shall coincide with that of the future delivery of the plot.

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