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V5396-16 21 December 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · permuta

Termination of a land swap for future construction does not constitute a new supply of goods for VAT purposes

A company has requested clarification on the VAT and Property Transfer Tax (ITPAJD) implications following the termination of a land swap agreement for future construction due to a bankruptcy proceeding. The DGT ruled that for VAT, the original transaction must be rectified, whereas for ITPAJD, the refund depends on whether the termination is court-ordered or by mutual agreement.

The question raised

Treatment for the purposes of Value Added Tax and Transfer Tax and Stamp Duty.

The DGT's ruling

Regarding VAT, the return of the land following the resolution of the exchange is not a new supply, but rather a resolution of the initial supply, whereby the tax amounts must be rectified via a credit note. Regarding ITPAJD, if the resolution is judicial and there are no lucrative effects, a refund of the tax paid may be requested. If the resolution is by mutual agreement, it is considered a new taxable event.

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