VAT accrual and the put at disposal in the supply of real estate
Judgment of the Spanish Supreme Court of 7 November 2017.
The company PROVI 46 SL, agreed on December 1st, 2011 two private purchase contracts with the company GESVICAM, S.L, acquiring various lands.
PROVI 46 SL understands that the put at disposal of the lands was carried out from the moment of its acquisition (December 1st, 2011) and, as proof, brings three notary documents in which it is said that the possession of such property is transferred in such an act.
However, the elevation to public deed of this transmission was delayed, performing at a later time.
December 20, 2011, the selling company issues invoices for each purchase contract, charging VAT at 18% and deducting the purchaser the VAT quotas paid, in the VAT return corresponding to the last quarter of 2011.
Both, Spanish Auditors and the Spanish Central Administrative Court, considered that the content of contracts does not follow that the estates and property have been put at the disposal of the acquirer, so it has not accrued tax, and therefore the VAT quotas paid are not deductible”.
That being said, should begin by mentioning that according to article 75 of the Spanish VAT Law, supplies of goods are accrued tax when put at the disposal of the acquirer or, where appropriate, take place when they are carried out in accordance with the law which is applicable to them.
In this sense, article 1462 of the Spanish Civil Code, establishes that sold thing means supplied when in power and possession of the buyer. Besides this precept boasts that when making the sale by means of public deed granting this will be equivalent to the supply of the thing subject to contract, if it does not it appears clearly otherwise.
Therefore, in the case of immovable property, the date of the signing of the public deed, will determine the accrual unless the public deed would mention otherwise.
However, the European Court of Justice, specifying the concept of putting in possession of the acquirer, pointed out in its judgment of 8 February 1990 that paragraph 1 of article 5 of the Sixth Directive must be interpreted in the sense that is considered “delivery of goods” the transmission of the power of disposal of a good body with the powers attributed to its owner, although there is no transmission of the legal property of the good”.
According to this doctrine, the putting in possession of the acquirer entails giving the same faculties about the good or goods subject to supply allowing you to act against third parties as if it were owner or owner of the property even if it is not, and regardless of which there is or non a physical supply of good.
In the opinion of the appellant to prove that the lands were put “at the disposal of the acquirer”, real substantial fact that conditioned the accrual basis in accordance with the criteria which we have just exposed, would be sufficient with the covenant contained in the private document of sale by virtue of which possession is transmitted.
Firstly, the Spanish Supreme Court understands that this claim is substantially directed to justify that there has been transmission of the domain, which is in any case insufficient for purposes that interest now because you have to register not is that aired the property, but that lands covered by sales were put at the disposal of the acquirer to the extent that it attributed, for the purposes of the accrual of VAT, the judgment of the Supreme Court mentioned above, and the doctrine of the European Court of Justice to which it refers.
Secondly, the Spanish Supreme Court considers that the clauses contained in the private purchase contracts do not have the effect of put at disposal that could determine the accrual of the tax.
In the absence of that legally supported forecast according to which the granting of the public deed is equivalent to the supply of the land, it is essential to prove by other means that the supply has occurred. And is since then ineffective for this mere covenant contained in the contract that has no other value than of an additional agreement incorporated in the same title.
Not has been credited, as a result, the fact that the deduction is conditioned.
Then, the Spanish Supreme Court agrees with the conclusion of the Spanish Central Administrative Court as not to consider accredited the put at disposal required by article 75.Uno.1 of the Spanish VAT Law by the fact of having incorporated into contracts the clause that invokes the recurrent.
All these reasons have led to the dismissal of the appeal. Notwithstanding this, the refund of taxes unduly paid could be requested, which has nothing to do with the issue now under discussion concerned, as we have seen, the determination of the accrual of VAT on supplies of goods.