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V3195-21 23 December 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · exención

The lease of land for endowment uses may be subject to VAT if it allows the installation of business activity elements

A city council inquires whether the lease of land for endowment services is exempt from VAT and how to treat the IBI (Property Tax) assumed by the local entity. The DGT determines that the operation is subject to the tax as it may constitute a lease for the installation of business activity elements.

The question raised

Possibility of applying the exemption under Article 20. One. 23º of the Value Added Tax Law and determining the treatment, for the purposes of said law, of the IBI specified in the description of the facts.

The DGT's ruling

The lease of land is exempt pursuant to Article 20.One.23º of the VAT Law, regardless of its urban planning classification. However, the exemption does not apply if the land is intended for the installation of elements of a business activity. In this case, as it is for endowment uses, the operation is subject to the general rate of 21%. The IBI passed on to the lessee forms part of the tax base.

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