The list established in article 20 of the VAT Law on exemptions in internal operations includes: the second and subsequent deliveries of buildings, including the land on which they are located, when they take place after their construction or rehabilitation has been completed (Art 20.One.22.º).
In this sense, deliveries of buildings made by the same developer after having been used uninterruptedly for a period equal to or greater than two years are also exempt.
However, if we continue reading said article, section two states that the aforementioned exemption may be waived by the taxable person, with the condition that the acquirer is a businessman or professional who carries out the operation within the exercise of his economic activity and has the right to make a total or partial deduction of the Tax incurred in the acquisition.
Likewise, the exemption relating to rural land and other land that does not have the status of buildable land can also be waived (Art 20.Uno.20.º).
Why give up the exemption?
At this point we could ask ourselves Why would anyone want to waive an exemption?. The answer is found in the relationship between the Value Added Tax and the Property Transfer Tax (ITP) and more specifically in its deductibility.
Both taxes (VAT and ITP) are levied on the transfer of goods and rights, with VAT being applied when the transferor is a businessman or professional and ITP when it is an individual. However, there are some cases in which the ITP is applied when the transferor is a businessman or professional and the transaction is not subject or subject and exempt from VAT, as is the case in the case presented.
Therefore, if we apply the VAT exemption, the delivery of the properties would be taxed by the ITP. For the business or professional acquirer The ITP represents a non-deductible cost while if you renounce the exemption, you will bear a VAT that you will be able to deduct in your quarterly or monthly VAT return (form 303).
Reversal of the passive subject.
On the other hand, when the exemption referred to in sections 20 and 22 of article 20.One of the VAT Law is waived, VAT reverse charge applies, that is, the purchaser is the one in charge of settling the Tax. The transferor will not charge VAT to the invoice or sales contract.
This is therefore one more advantage for the purchaser, since, if he has the right to a full VAT deduction, it does not involve any disbursement for this concept by including in his declaration a self-paid VAT (box 12) and another input VAT (box 28 or 30) of equal amount, compensating between both.
This resignation, which will be practiced for each operation independently, must be justified by a declaration signed by the purchaser, in which he states his status as a taxable person with the right to a total or partial deduction of the Tax paid for the acquisition of the corresponding real estate or, as the case may be, that the destination foreseeable purpose for which the acquired assets will be used enables you to exercise the right to deduction, whether totally or partially.
Evidently in the deed of sale of the property A clause will be included stating the waiver of the exemption, in which case it will serve both as reliable communication of the same and as a justifying statement by the purchaser that it meets the necessary conditions.
Fountain: accounting-consultant.es
