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V2944-17 15 November 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · derecho de superficie

Property purchases or the creation of surface rights may be subject to VAT depending on the status of the sellers

An individual has requested clarification regarding the VAT liability of two methods for acquiring a property: direct purchase or construction on third-party land via a surface right. The Directorate-General for Tax (DGT) has ruled that both options may be subject to VAT if the sellers are acting as entrepreneurs or developers.

The question raised

Liability of both alternatives for Value Added Tax and/or Transfer Tax and Stamp Duty. Accrual of the first alternative. Liability to the "onerous property transfers" or "stamp duty" modality of the mortgage to be constituted in the first alternative.

The DGT's ruling

In a direct purchase, if the sellers are developers, the delivery is subject to VAT and the accrual occurs with each advance payment. In the second alternative, the creation of the surface right is subject to VAT as it is a transfer of use carried out by an entrepreneur, accruing annually based on the proportional part of the reversion of the building. The subsequent delivery of the land and the building following the reversion is considered a second delivery, which is subject to but exempt from VAT.

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