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V3211-21 23 December 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · aportación no dineraria

Contribution of property to a company is VAT liable if first transfer by promoter

A developer asks whether the contribution of a building to a company is subject to VAT and whether VAT on construction can be deducted. The DGT responds that such contribution is a taxable operation and not exempt, and that initial deductions must be corrected if the intended purpose changes.

The question raised

Question posed: Whether the contribution of the real estate to the company would be an operation subject to Value Added Tax and whether, in such an event, the taxpayer would be entitled to the deduction of the input tax incurred and not deducted during the construction of the aforementioned building.

The DGT's ruling

The contribution of real estate to a company constitutes a supply of goods subject to and not exempt from VAT, as it is the developer's first transfer. If the foreseeable use of the real estate was the leasing of residential property (an exempt operation), the input tax incurred during construction should not have been deducted. Upon the contribution, a change in foreseeable use occurs, which requires the rectification of deductions pursuant to Article 114 of the VAT Act.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

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