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Registry Encumbrance: DGT doctrinal evolution

How the DGT's position on this topic has evolved, and the rulings it rests on.

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How the DGT's position has evolved

Settled doctrine High confidence 13 rulings · 2019–2024

Current position

The transfer of land under development by a business entity is subject to IVA (Value Added Tax). If the plot has a valid registry encumbrance at the time of fulfillment of urban planning duties, the reverse charge mechanism under article 84.One.2º.e), third hyphen, of the IVA Law applies. For this to proceed, urban development costs must be accrued and due, with the encumbrance acting as a real security.

The DGT's position has moved from excluding urban planning charges from being considered deductible from the real value in 2019, to focusing its analysis on the validity of the registry encumbrance for the application of the reverse charge mechanism. Since 2021, the doctrine has stabilized on the principle that the validity of said encumbrance and the exigibility of the costs are determining requirements for applying the reverse charge assumption.

Turning points

  1. V2243-21

    Establishes that the reverse charge mechanism requires that costs are accrued and due, and that the registry encumbrance is valid.

  2. V1378-24

    Defines the nature of the registry encumbrance as a real security, similar to a tacit legal mortgage.

Analysis based on 12 of 13 rulings with a stated position. Updated 27 September 2026.

Rulings on this topic

13

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