Binding tax ruling V2886-17, issued by the Spanish General Tax Sub-directorate last November 23, 2017.
The consultant entity wishes to sell all the solar plants that make up its power generation business. Solar plants have their corresponding photovoltaic installations, connection lines, delivery and transformation centers and lines of connection of generation.
Although in principle, this transmission of solar plants by a company seems an operation subject to VAT, since the taxable event included in the Spanish VAT Law states that shall be subject to VAT those supplies of goods carried out within the Spanish VAT territory by businessmen or professionals for consideration, with usual or occasional character in the development of their business or professional activity.
However, on the other hand both the EU VAT Directive and the Spanish Tax Law, include the possibility of considering that the transfer of a total or partial universality of goods does not involve the realization of a supply of goods subject to VAT.
In this sense, the Spanish VAT Law establishes in its article 7 that the transmission of a set of elements that constitute an autonomous economic unit, forming part of the business or professional assets of the taxable person, able to develop a business or professional activity by their own means, is not subject to VAT. The modern wording of this article is influenced by the judgment of the ECJ “Zita Modes” to establish that the concept of transmission, whether for consideration or free or in the form of a contribution to a company, of a total or partial universality of goods must be understood in the sense which includes the transmission of a mercantile establishment or an autonomous part of a company with bodily elements and, where appropriate, intangible which, together, constitute a business or a part of a company able to develop a self-employed economic activity, but that does not include the mere assignment of goods, such as the sale of stock.
Therefore, the consideration of not-subject to VAT requires that all the elements transmitted by each entrepreneur are sufficient to allow the acquirer to develop an autonomous economic activity.
However, in the case that concerns us, in order to function, the solar Park needs of common solar Park facilities that are not owned private but in common, and cannot therefore operate in an autonomous and independent way without these common facilities.
Then, although the transferring entity transfers all the elements it has for to the production of electrical energy, due to the fact that this transmission does not include the common elements (essential for the production of electrical energy), it cannot be concluded that elements transmitted may be considered as constituting an autonomous economic unit.
Under these circumstances, the transmissions mentioned in this consultation are subject to the VAT, and must pay each of the assets that comprise it independently according to the General rules of the VAT.
On the other hand, the consultant company wants to know If solar plants have the consideration of building for VAT purposes.
Although this body has already pronounced in other consultations that the solar panels, which can be disassembled without damage or breakdown for its location in a place different from its original location, do not have the consideration of building for the purpose of the tax, however, all of the elements that make up a solar Park, including, among others, the photovoltaic systems (solar panels), lines of connection or evacuation of the energy produced, delivery centers and transformation of energy, generation connection lines and warehouses where they are located, shall be regarded as buildings.
Additionally, due to the solar Park has been used for more than one year by the transferor, it won’t have the consideration of first supply of goods made by the promoter, therefore being a second supply of goods, the transaction shall be VAT exempt, although exist the possibility of renouncing to the exemption if the legal conditions are met.
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