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V0088-21 25 January 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party applies to industrial building rehabilitation if legal requirements are met

A grain and agriculture trader asks whether the rehabilitation of his industrial warehouses after a damage event is subject to the passive party investment mechanism. The DGT responds that this mechanism applies whenever the works comply with the legal requirements for building rehabilitation.

The question raised

Challenges the application of the reverse charge mechanism provided for in Article 84.one.2º f) of the Value Added Tax Law

The DGT's ruling

The reverse charge mechanism for the taxable person applies when the recipient is an entrepreneur or professional and the works consist of urban development or the construction/rehabilitation of buildings. For the rehabilitation to be valid, the main object must be reconstruction (more than 50% of the cost in structural elements, facades, or roofs) and the cost must exceed 25% of the value of the building. Industrial warehouses are considered buildings if they are used for an economic activity and are not ancillary to an agricultural exploitation.

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