Transmission of a property for rehabilitation


Spanish Doctrine of the Central Economic Administrative Court, dated March 17, 2015.

The issue is about the transmission, between two companies, of a building for its rehabilitation and the subjection of this transaction to VAT.

The claimant, acquired a property for its rehabilitation, being reflected in the deed of sale the renouncing to the VAT exemption for this transaction and also that the purchaser intended to rehabilitate that property, so the transaction was subject to and not exempt from VAT.

Despite what was said in the previous paragraph, the Spanish Administration considered that the requirements to waive the exemption from VAT in that operation were not met, so it should be taxed by Transfer Tax.

The entity which obtained the property filed an economic-administrative claim but it was rejected by this Court because it understood that this company did not qualify for the waiver of exemption in VAT and also the complaining company had not established facts were satisfied that confirm their intention to carry out works in the building aimed at rehabilitation. The submitting entity filed an appeal against this judgment.

At this point the Central Administrative Court resolved the matter by saying that this was a transaction subject and not exempt from VAT, then, with the statement that it would proceed to the implementation of actions to rehabilitation of the property, the exemption did not apply, therefore, not appropriate to go to the figure of the waiver of exemption since such exemption in principle did not apply, since the acquisition of property for rehabilitation excludes the operation of the exemption included in the law.

Regarding the period of time that can elapse between the acquisition of the property and rehabilitation, mention that, even though April 22, 2008, VAT Law 37/1992 specifically mentioned that rehabilitation was to be immediate, this word was deleted from the law as of that date. So, in the Central Economic Administrative Court opinion, that is not applicable VAT exemption in this operation, have to analyse all available evidence to assess whether it is to rehabilitate the building.

According to the Central Economic Administrative Court, contained in the evidence to suggest that the acquirer has made the necessary actions to carry out the rehabilitation of the building and therefore resolved in favour of the appellant raised estimating the resource file.

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TEAC 17 marzo 2015

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