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12 June 20232 minute read

VAT treatment of transfers of real estate assets provided as security clarified by the Spanish General Directorate of Taxes.


The Spanish General Directorate of Taxes reviews its previous criteria and restricts the scope of the reverse charge mechanism for transfers of real estate assets provided as security.

Article 199 of the VAT directive provides that Member States may require that the person liable for the payment of VAT is the taxable person who received goods as a result of executing a security.

This principle was implemented in the Spanish VAT Law by establishing that a reverse charge mechanism was applicable to the transfer of real estate assets in execution of a security. The Law expressly set forth that such execution shall be deemed to exist when the real estate asset is transferred in exchange of the total or partial extinction of the secured debt or the commitment by the purchaser to pay the debt (subrogation of the borrower position).

The Spanish Central Administrative Court issued several resolutions interpreting this rule establishing that it must be analysed in accordance with the purpose of article 199 of the VAT directive and restricted its scope.

As a result, the General Directorate of Taxes has confirmed that this rule will only apply to transfers of real estate assets held as a security:

  • as a payment in kind of the secured debt (dación en pago), and
  • where the purchaser is subrogated to the borrower.
Key takeaway

This ruling is binding for the Tax Authorities. Consequently, businesses should follow this criterion when assessing who is the taxpayer in such transactions.


Reference: Ley 37/1992 art. 84- Uno- 2º