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V3124-20 20 October 2020 · SG de Impuestos sobre la Renta de las Personas Físicas Criterion in force
IVA · arrendamiento de terreno rústico

Leasing of rural land for municipal parking is subject to 21% VAT

A taxpayer wishes to lease rural land to a local council for use as a car park. The DGT determines that the transaction is subject to VAT at the standard rate and analyses the classification of the income for Personal Income Tax (IRPF) purposes.

The question raised

1) Taxation under Value Added Tax for said operation.

The DGT's ruling

The lease of rural land for the installation of a parking lot is not exempt from VAT, therefore the 21% rate must be applied. For Personal Income Tax purposes, the income shall be considered income from economic activities if at least one person is employed under a full-time employment contract, or income from real estate capital if said requirement is not met. If it is a business lease, it shall be subject to a 19% withholding tax, but if it is rural land as an isolated element, it shall not be subject to withholding.

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