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V0337-22 21 February 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of passive subject not applicable to street repairs

A company asked whether it should apply the inversion of the passive subject to a public works contract with a municipality. The DGT responded that this mechanism applies only to land development or construction/rehabilitation of buildings, not to street repairs.

The question raised

Taxable person for Value Added Tax. Application of the reverse charge mechanism.

The DGT's ruling

The reverse charge mechanism requires that the recipient be a business or professional, that the operation be a work execution, and that the object be the development of land or the construction or renovation of buildings. If the works consist of street repairs that do not qualify as development, the reverse charge mechanism does not apply and VAT must be charged.

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