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V0338-22 21 February 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party not applicable to drainage improvement works in a municipal park

A consultancy company asked whether the inversion of the passive party should be applied to drainage improvement works for a local council. The DGT responds that it is not applicable because the work does not constitute a process of land urbanisation, construction, or building rehabilitation.

The question raised

It is questioned whether the reverse charge mechanism is applicable to the invoicing corresponding to the aforementioned land development works.

The DGT's ruling

For the reverse charge mechanism to apply to the taxable person in works executions, the recipient must be an entrepreneur or professional and the operation must be part of a land development or the construction/rehabilitation of buildings. In this case, the drainage improvement works in a park are not classified as land development or construction of buildings. Therefore, the company must charge VAT to the city council.

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