VAT treatment on the leasing of business premises with right to transfer


Binding tax ruling V0060-16, issued by the Spanish General Tax Directorate on January 12, 2016.

This transaction consists of the lease of a local business (Café) with right to transfer within the deadline of one year. By the Constitution of the option to transfer the lessor obtained a payment.

The Spanish Authorities clarifies that this business is composed of two features of different services, a lease of local business and, on the other hand, the granting of the right of transfer.

Focusing on the granting of the right of transfer, the Spanish General Tax Directorate clarifies that, regardless that this option exercises by the tenant, the mere granting of this possibility is the provision of services subject to VAT, irrespective of which finally will exercise this option.

In this sense, the Spanish General Tax Directorate clarifies which, in this particular case, the amounts paid on the occasion of the Constitution of the right of transfer of business, is not part of the base of the subsequent transmission of the same, they form part of the taxable income of the own concession of the right of transfer, which may be exercised or not.

Finally, in the event that the lessee exercises the option for the transfer of business, it must be determined whether transmitted elements constitute an autonomous economic unit capable of developing a business or professional activity by its own means, in which case the provision of services consisting in the exercise of this option of transferring the business would not be subject to VAT.

Conversely, if the transfer of business assets cannot be considered as autonomous economic unit, such transmission shall be subject to the VAT.

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CV 0060 16

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