VAT on the leasing of land for photovoltaic plants

The Directorate General of Taxes (DGT) has issued a relevant criterion regarding the taxation of land leases intended for the installation of photovoltaic energy production infrastructure. This resolution clarifies both the taxable nature of the operation and the identity of the taxable person.

What the DGT has resolved

The query concerned the determination of the taxable person for Value Added Tax (IVA) in the leasing of land for this specific purpose. The DGT has resolved that said operation does not enjoy an exemption, and therefore is subject to the general tax rate of 21 percent.

Furthermore, the administration has specified that the taxable person for the tax is the usufructuary of the land. By acting as the lessor in their capacity as an entrepreneur or professional, the usufructuary is the one who must comply with tax obligations, which includes issuing the invoice with the corresponding VAT to the entity taking the lease.

What it means for you

This criterion has direct implications depending on the position of the affected party:

• For the usufructuary: If you receive income from the use of land under a usufruct regime for energy purposes, you assume the status of the taxable person. This implies the obligation to declare VAT and issue invoicing at the 21 percent rate.
• For the lessee entity: Companies that rent land to install photovoltaic plants must receive the invoice with the VAT itemized by the usufructuary in order to proceed in accordance with current regulations.

What should be done

Given the application of this criterion, it is necessary to verify the legal nature of the lease agreements and the status of the usufructuary of the person receiving the rent. The correct identification of the taxable person and the application of the 21 percent tax rate are fundamental to avoid contingencies with the Tax Administration. It is recommended to assess the specific contractual situation of each energy project.