The Spanish Tax Court clarified that a sale and lease-back transaction carried out between an entity and a bank does not qualify as a supply of goods (here Real Estate) for VAT purposes, but as a financing transaction.
In that case, it was found that the purpose of the transaction was to obtain financing and not to transfer the ownership of the real estate. The transfer of real estate to the bank was conditioned on its subsequent leasing with a purchase option, which indicated that the real intention was to secure a loan and not to transfer ownership of the real estate. The bank assumed no risks or benefits associated with the property, while the entity continued to use the real estate uninterruptedly and to bear all associated costs. Therefore, according to the Tax Court there is no supply of goods in a transaction such as the one at hand so: (i) VAT cannot be charged on the sale of the real estate and (ii) the VAT initially deducted cannot be adjusted under the capital good scheme.
Key takeaway
The resolution of the Tax Court follows the position of the EU Court of Justice in case C-201/18 and qualifies as doctrine binding for the Tax Authorities. Consequently, businesses should follow this criterion when assessing the VAT treatment of similar transactions.
Reference
DYCTEA
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