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V0173-15 20 January 2015 · SG de Impuestos sobre el Consumo Criterion in force
IVA · entrega de bienes

The manufacture of a medicinal product with an active ingredient provided by the client may be considered a supply of services

A pharmaceutical manufacturing company inquires whether the production of a product where the client provides the active ingredient (28% of the product and 2/3 of the cost) constitutes a supply of goods or a supply of services. The DGT determines that, as the client's contribution is significant, it constitutes a supply of services.

The question raised

Classification of the described operation as a supply of goods or a supply of services, place of supply, and applicable tax rate.

The DGT's ruling

If the client provides the materials and these represent a significant part of the final product, the operation is a supply of services. In this case, as the active ingredient represents two thirds of the total cost, the operation is classified as a supply of services. The applicable tax rate is 4% whether it is considered a supply of goods or a work execution that constitutes a supply of services. The place of supply will depend on whether the client has its registered office or permanent establishment in the territory to which the tax applies.

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