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V0675-20 3 April 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party applies to electricity supply infrastructure in a development

A company developing land asks whether the passive party investment mechanism applies to an electricity company's services for network installations. The DGT confirms that the mechanism applies as these constitute works carried out within a development.

The question raised

Whether the reverse charge mechanism for Value Added Tax, as provided for in Article 84.One.2º.f) of Law 37/1992, would apply to the execution of these works to be contracted by the applicant entity.

The DGT's ruling

The reverse charge mechanism applies when the recipient is a business or professional, the transaction is a contract for work (with or without materials), and the contract's purpose is the development of land or the construction/renovation of buildings. Electrical supply works are considered part of land development works. Therefore, the rule applies when the works are carried out for the applicant within the framework of land development.

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