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V2924-23 31 October 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

Transfer of a building intended for demolition and new development is subject to VAT

A property developer has requested clarification on whether the transfer of an urban plot intended for demolition and urbanisation is subject to or exempt from VAT. The DGT has ruled that if the purpose is demolition for a new development, the transaction is subject to VAT and does not qualify for exemption.

The question raised

1.- Whether the transfer of said plot would be subject to and, where applicable, exempt from Value Added Tax pursuant to Article 20.One.20º or 22º of the Value Added Tax Act.

The DGT's ruling

The transfer of a building that is to be demolished prior to a new urban development is not considered a transfer of an exempt building, but rather a transfer of buildable land. In this case, the transaction is subject to VAT at 21%. If the building were not intended for demolition, it would be a second transfer, subject and exempt, allowing for the waiver of the exemption if the acquirer has the right to deduction.

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