Back to index
V3113-18 30 November 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución hipotecaria

Transfer of a plot of land via mortgage foreclosure is subject to VAT and the credit institution is the taxable person

A company has requested clarification on whether the transfer of a plot of land to a credit institution through mortgage foreclosure is subject to VAT or Transfer Tax (ITP), as well as identifying the taxable person and the party responsible for issuing the invoice. The DGT has determined that the transaction is subject to VAT as it involves assets used for business activities, and the reverse charge mechanism applies.

The question raised

Liability for Value Added Tax or for Transfer Tax and Documented Legal Acts, taxable person and person liable to issue an invoice.

The DGT's ruling

The transfer of real estate by a commercial company through the enforcement of a guarantee is subject to VAT if the asset is used for its economic activity. The exemption for non-buildable land does not apply as it concerns an urban plot. The taxable person is the successful bidding credit institution by application of the reverse charge mechanism. The transferring company must issue an invoice to the acquiring entity indicating said reverse charge.

Book your free first meeting