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V4608-16 28 October 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · patrimonio público del suelo

Transfer of plots by a City Council is subject to VAT if carried out for consideration

A City Council has requested a ruling on the VAT treatment of the disposal of plots with deferred payments linked to urban planning changes. The DGT has ruled that the management of municipal land assets constitutes a business activity and, as there is consideration involved, the transaction is subject to VAT.

The question raised

Taxation under Value Added Tax regarding the aforementioned transfer.

The DGT's ruling

The disposal of plots by a City Council is a business activity subject to VAT provided it is carried out for consideration. The exemption for rural land does not apply if the land is undergoing urbanization or is buildable. The tax accrual occurs when the land is made available to the acquirer, and the tax must be charged on advance payments actually collected.

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