The transfer of a dental clinic as an economic unit will not be subject to VAT

The acquisition of going concerns carries decisive tax implications for the cost structure of the operation. Recently, the Dirección General de Tributos (DGT) has clarified the scope of non-subjectivity to Value Added Tax (IVA) in business transfer operations.

What the DGT has resolved

The tax authority has determined that the transfer of a set of elements, both tangible and intangible, that constitute an autonomous economic unit is not subject to IVA. For this condition to be met, the transferred elements must be capable of carrying out an activity on their own, possessing the necessary organizational structure.

A relevant point of the resolution is the management of the real estate. The DGT clarifies that it is not mandatory to transfer the ownership of the premises for the operation to be considered a business transfer. The mere assignment of the lease agreement may be sufficient to guarantee the continuity of the activity, allowing the set of elements to maintain its economic autonomy.

What it means for you

For companies operating in service sectors, such as healthcare or aesthetics, this criterion offers clarity regarding the tax burden in expansion or business succession processes. If the acquisition of a dental clinic includes furniture, machinery, the client portfolio, and the organization necessary to operate, the operation is not considered a sale of goods or services subject to IVA, but rather a transfer of an economic unit.

This prevents the buyer from having to bear an additional tax outlay at the time of acquisition, improving the liquidity of the operation.

What should be done

In an operation of this type, it is fundamental to document the nature of the transferred elements. To ensure that the operation falls under non-subjectivity to the tax, it must be proven that:

• A complete organizational structure is transferred.
• The elements allow for the development of the activity autonomously.
• Business continuity is guaranteed, even through the assignment of leases.

Given the complexity of proving the autonomy of the economic unit, it is necessary to assess each case individually to ensure compliance with current regulations.