Skip to content
Back to index
V0350-24 12 March 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Investment of the passive party may apply to biogas plant construction if the facility is considered an edification

An enterprise building biogas plants under a turnkey model asks whether the investment of the passive party applies to its operations and those of its suppliers. The DGT responds that the mechanism applies if the plant is considered an edification and the operation constitutes an execution of works.

The question raised

Whether the reverse charge mechanism for the taxable person under Article 84.One.2.f) of the Value Added Tax Law would apply to the described operation, as well as whether it would be applicable to the consultant's suppliers in that project and, specifically, to: a) raw material suppliers; b) subcontracting of engineering works; c) supply of mechanical equipment, including its assembly and commissioning; and d) machinery rental.

The DGT's ruling

The reverse charge mechanism for the taxable person under Article 84.One.2.f) applies to the construction of the biogas plant as it constitutes a building and a works execution. In the subcontracting chain, it shall apply whenever the operation is of a works execution nature. The supply of raw materials without installation, engineering works, and machinery rental do not constitute works execution, unless the provider undertakes to execute a part of the works and assumes responsibility for the result. The supply of mechanical equipment shall constitute works execution if it includes installation, assembly, and commissioning, being integrated into the building.

Book your free first meeting