- The TEAC confirms the liquidation of VAT for advance payments in contracts for the sale of urbanizable land.
- The TEAC examines the delivery of urbanized land whose urbanization had not begun on the date of the sale.
- The relevant factor for the application of the exemption provided for in Article 20.One.20th of Law 37/1992 is not the physical state of the land on the date of the sale, but the state of the land that the transferor undertakes to make available to the acquirer.
- The resolution analyzes the claim filed by XZ SL against the liquidation agreement issued by the Regional Inspection Department of the AEAT in Valencia on April 26, 2023, regarding the VAT for the 2011 to 2013 tax years.
- The AEAT initiated an inspection in 2014 to verify the deductibility of VAT quotas declared by XZ SL and the request for a refund of 823,410.19 euros in the fourth quarter of 2013.
- The Administration considered that the activity of XZ SL was purely financial (raising funds with repayment and interest), exempt from VAT, so it denied the refund.
- XZ SL signed contracts for the promise of sale with investors, committing to deliver urbanized plots in the future in a real estate development.
- Investors paid advances to reserve plots that did not yet physically exist, as the urban planning process was pending approval.
- To attract investors, XZ SL hired intermediaries or commercial agents who received high commissions, between 18% and 22% on the investments raised.
- The invoices of these intermediaries were the main source of VAT deductions declared by XZ SL.
- The AEAT suspected that the main activity of XZ SL was not real estate, but the mere raising of funds, which would invalidate the deduction of VAT on these commissions.
- In the fourth quarter of 2013, XZ SL requested the refund of 823,410.19 euros of VAT derived from the quotas borne by the commissions paid to intermediaries.
- The AEAT considered that:
- The main activity of XZ SL could be financial (raising funds with repayment of interest), which did not generate the right to deduct VAT.
- If the activity was real estate, the advance payments of the investors should have accrued VAT at the time of collection.
- As a result, the AEAT denied the refund and issued an additional liquidation, modifying the taxable base and increasing the VAT payable.
- In 2014, the AEAT referred the case to the Public Prosecutor’s Office, which initiated criminal proceedings for possible tax fraud.
- The Provincial Court acquitted XZ SL, concluding that it had not been proven that the company’s activity was exclusively financial and that there could be a genuine urban development activity.
- After the criminal sentence, the AEAT resumed the inspection and concluded that XZ SL had received advance payments for the future sale of urbanizable plots, which accrued VAT at the time of payment.
- A liquidation agreement was issued that:
Source: audiconsultores-etlglobal.com
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
