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V2957-20 30 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · derechos de aprovechamiento

Land transfers may be subject to or exempt from VAT depending on urbanisation status and intended use

A company has requested clarification on whether transferring land to a local council in exchange for development rights is subject to VAT. The DGT explains that VAT liability depends on whether the land is rural, undergoing urbanisation, or is buildable, and further analyses the tax accrual in the context of a barter transaction.

The question raised

Whether said deliveries are subject to Value Added Tax. If applicable, the accrual and the taxable person for the Tax.

The DGT's ruling

The delivery of land is exempt if it is rural or intended for public parks and gardens. No exemption applies if the land is undergoing urbanization (due to having incurred physical transformation costs) or if it is already buildable. Development rights are considered a delivery of goods and their accrual occurs when they are made available to the acquirer, generally following the notification or publication of the replanning project. If the delivery of the land precedes that of the rights, accrual occurs upon payment.

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