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V0124-23 3 February 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive subject applies to urbanisation works if recipients are entrepreneurs or professionals

A municipality asks whether urbanisation works and the payments to property owners are subject to passive subject inversion and how IVA deductibility should be managed. The DGT responds that inversion applies if property owners act as entrepreneurs and must expressly communicate this.

The question raised

Whether the reverse charge rule provided for in Article 84.One.2.f) of Law 37/1992 would apply to the urbanization works contracted by the taxpayer, as well as to the assessments that the taxpayer passes on to the owners. Deductibility of the amounts borne by the taxpayer in the execution of said works, in particular, the possibility of applying the special pro rata and the procedure for requesting its application.

The DGT's ruling

The reverse charge mechanism for the taxable person applies to urbanization works when the recipient is an entrepreneur or professional and communicates such status. Owners are considered entrepreneurs if the assessments are imputed with the intention of allocating the land to economic activity. For deductibility purposes, the City Council must apply a reasonable imputation criterion if it carries out both taxable and non-taxable operations, with the option to apply a special pro rata.

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