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V3091-21 13 December 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · urbanización

Taxation of building plots depends on seller status and the nature of urbanisation

A taxpayer has enquired whether the purchase of an urban building plot following a land repartition is subject to VAT or Transfer Tax. The DGT has ruled that the application of each tax depends on whether the seller is considered a business entity and whether urbanisation costs have been incurred.

The question raised

It questions whether the acquisition of the plot by the consultant will be a transaction subject to Value Added Tax or to Transfer Tax (ITPAJD).

The DGT's ruling

If the seller is an individual who has not incurred material transformation costs for the land, the sale is not subject to VAT and shall be taxed under ITPAJD. If the seller is an entrepreneur and the transfer incorporates urbanization costs with the intent to sell, the transaction shall be subject to VAT at 21%. If the transaction is subject to but exempt from VAT, it shall be subject to ITPAJD.

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