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V0376-20 19 February 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Passive investor investment only applies if works qualify as building or renovation

A civil society asks whether adaptation works carried out in a rented premises are subject to passive investor VAT investment. The DGT responds that such investment only applies if the works meet the legal requirements to be classified as building or renovation works.

The question raised

Application to the works performed of the reverse charge mechanism provided for in Article 84.One.2.f) of the Value Added Tax Law.

The DGT's ruling

For the reverse charge mechanism to apply to the taxable person in works executions, the action as a whole must be classified as land development, construction, or building rehabilitation. In the case of rehabilitation, it must meet the requirement that its main object is reconstruction (more than 50% of the cost in structural elements, facades, or roofs) and that the cost exceeds 25% of the value of the building excluding the land. If the conditioning works do not reach this classification, the entrepreneur performing them shall be the taxable person and must charge VAT.

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