BackA tax payer bought a property and paid the Transfer Tax and Stamp Duty (modality of Onerous Patrimonial Transfers). She is currently carrying out renovation work on the property, as stipulated in article 20.1.22 of the VAT Law, with a view to selling the building once it is complete. During the renovation works, VAT is being deducted from the VAT borne by the company. However, if after some time from the completion of the renovation works you do not manage to sell the building for the desired price, you will opt to rent it as a dwelling.
If a property that was renovated with the intention of being sold is finally rented, there is a change in its intended use and, therefore, it is necessary to regularize the deductions initially made. The question is how to carry out this regularization, either through article 9.1 letters c) or d), article 107 or article 114 of the VAT Act, once the right to the deduction has been determined.
In relation to the case under evaluation, it can be stated that, if there is a change in the destination of the good before it starts to be used or to operate, the corresponding deduction in the scope of the self-consumption of goods must be adjusted.
Indeed, in this case there is a transfer of goods from the productive cycle to the fixed assets, which could be considered as self-consumption as established in section d) of article 9.1 of VAT Act. However, the predominant opinion of the doctrine has been to give priority to letter c) over letter d) of the same article, in situations where there is a transfer between different sectors of activity, due to its greater specificity.
The realization of a self-consumption operation entails the obligation to declare and settle the corresponding tax liability. However, the taxation of self-consumption, as established in articles 9.1 and 7.7 of VAT Act, will only be applicable in those cases in which the corresponding VAT has been paid and deducted. In the event that the goods subject to self-consumption had been acquired without VAT because the seller was not a businessman or professional, there would be no repercussion of the tax and, therefore, the subsequent self-consumption would not be subject to taxation.
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