Frequently asked questions raised in this chapter

Taxation by the VAT or by the concept of onerous capital transfers of the Tax on Capital Transfers and Documented Legal Acts of the following transactions:

1.A businessman sells old furniture for renovation acquired 8 years ago.

The supply is subject to value added tax as it is made by an entrepreneur in the course of his business.

2.What if the seller is an educational institution?

This is a supply of goods for which neither tax is payable:

• It is not subject to transfer tax because it is carried out by an entrepreneur.

• It is not subject to VAT as it is one of the operations declared exempt by the VAT Law, as the goods have been used in exempt operations that do not generate the right to deduct input VAT (Article 20.1.24 of the VAT Law).

3.What if an entrepreneur who is not a property developer sells a flat to a private individual for housing?

The delivery is, by way of exception, taxable as a transfer of property:

• It is not subject to VAT as it is one of the operations declared exempt by the VAT Law as it is a second or subsequent supply of buildings.

• It is taxed under the concept of transfer of assets for consideration, even though it is carried out by an entrepreneur.

4.Purchase of a used typewriter in a shop or directly from a private individual.What tax is payable?

• If you buy in a shop you have to pay VAT to the trader.

• If purchased from a private individual, the transfer tax must be paid.

5.How is the contribution of machinery used in a business activity by a shareholder to a company and receiving the corresponding shares in return taxed?

• The supply of the machinery is subject to value added tax as the supplier is an entrepreneur and it forms part of his business assets.

• If applicable, it will also be taxed under the concept of corporate transactions of the Transfer Tax and Stamp Duty, if the incorporation or increase of capital or the contribution of shareholders to replace losses takes place.