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V0750-19 3 April 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · prestación de servicios

Installation of machinery that becomes real estate is subject to VAT in Spain

A Spanish company has enquired whether the installation of packaging and sorting machinery for a Dutch company is subject to Spanish VAT. The DGT has ruled that if the machinery is installed in such a way that it becomes part of the real estate, the service is deemed to be related to real estate and is taxable in Spain.

The question raised

Place of performance of the consulted operations and liability for Value Added Tax.

The DGT's ruling

Installation or assembly services for machinery that, following installation, are considered real estate, are understood to be provided in the territory where said assets are located. For machinery to be considered real estate, it must be installed in such a way that its removal would cause a significant alteration to the building or construction. If the real estate where the machinery is installed is located in Spanish territory, the transaction is subject to VAT at the general rate of 21 percent.

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