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V0484-20 27 February 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

The tenant will be the VAT liable party for the investor's investment if the landlord has no permanent establishment in Spain

A Portuguese resident wishes to rent a building in Spain after carrying out expansion works. The DGT examines whether the landlord has a permanent establishment and how invoicing should be carried out.

The question raised

Application of the reverse charge mechanism for Value Added Tax purposes in relation to contracted expansion works and the deduction of tax amounts therein and in other supplies of goods and services that may be acquired for allocation to the leasing activity. Obligation to submit periodic tax returns.

The DGT's ruling

The consultant acquires the status of entrepreneur by making acquisitions with the intention of allocating them to the leasing activity. If they do not maintain material and human resources in Spain for the management of the lease, they do not have a permanent establishment and the lessee shall be the taxable person under the reverse charge mechanism. In the case of expansion works, the consultant shall be the taxable person under the reverse charge mechanism if these are considered a construction contract. For the refund of tax amounts, the general procedure of Article 115 of Law 37/1992 must be used.

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