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V3132-15 16 October 2015 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

Allocation of property to co-owners upon dissolution of a community of property may be subject to VAT

A community of property engaged in real estate development has requested a ruling on the taxation of the allocation of assets to its members following its dissolution. The DGT has ruled that such an allocation constitutes a supply of goods subject to VAT if the community acts as a business or professional entity.

The question raised

Question posed: Taxation of the operation in Value Added Tax.

The DGT's ruling

If the community of property jointly assumes the risk and venture of the activity, it holds the status of entrepreneur or professional, and the allocation of real estate to the co-owners is considered a supply of goods subject to VAT. The transaction may be exempt depending on the nature of the asset, with the waiver of the exemption being permitted if the acquirer is a taxable person with the right to deduction. Likewise, the change of use from development housing to leasing constitutes a self-supply of goods subject to tax.

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