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Execution of Guarantee: 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 8 rulings · 2014–2026

Current position

The transfer of real estate in execution of a guarantee or for the extinction of a guaranteed debt is subject to IVA (Value Added Tax) if the property is used for the transferor's business activity. The reverse charge mechanism applies whenever the acquirer is a businessperson or professional. In these cases, the tax base shall be the amount of the debt cancelled by the transfer.

The DGT's position remains constant regarding the application of the reverse charge mechanism in transfers due to the execution of a guarantee. It has been specified that the acquirer must be a businessperson or professional for the mechanism to operate, and the priority of the reverse charge due to waiver of exemption over that due to execution of guarantee has been clarified. The doctrine confirms that the tax base is the amount of the extinguished debt.

Turning points

  1. V0076-16

    Establishes that if the transferors assume the urbanization costs, the requirements for execution of guarantee to apply the reverse charge mechanism are not met.

  2. V0566-20

    Determines that the reverse charge mechanism due to waiver of exemption takes precedence over the case of reverse charge due to execution of guarantee.

Analysis based on 8 of 8 rulings with a stated position. Updated 2 October 2026.

Rulings on this topic

8
V5430-26 31 Jul 2026

Delivery of urbanised plot to settle debt subject to VAT

SG de Impuestos sobre el Consumo
agente urbanizadorterreno urbanizadosujeto pasivobase imponibleejecución de garantía LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 4.2
Affects CompanyExpat · Non-residentIndividual
V0342-22 23 Feb 2022

Construction deliveries subject to 21% VAT rate

SG de Impuestos sobre el Consumo
inversión del sujeto pasivoedificaciones en construcciónejecución de garantíaempresario o profesionaltipo impositivo LIVA — Ley 37/1992 del IVA art. 4.1LIVA — Ley 37/1992 del IVA art. 4.2
Affects CompanyExpat · Non-residentIndividual

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