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V0770-15 9 March 2015 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

The passive investment depends on whether the client entity acts as a trader or professional

A construction company asks whether the passive investment applies to renovation works for a religious congregation managing a student residence. The DGT replies that it will depend on whether the congregation carries out an entrepreneurial or professional activity on a remunerated basis.

The question raised

Question raised: Tax rate applicable to the aforementioned comprehensive renovation works of the building intended for use as a student residence. Applicability of the reverse charge mechanism provided for in Article 84.One.2º.f) of Law 37/1992 to said operation carried out for the religious congregation that operates said residence.

The DGT's ruling

The reverse charge mechanism for the taxpayer's investment in renovation works is applicable only if the recipient acts as a business or professional pursuant to Article 5 of Law 37/1992. If the entity carries out activities exclusively free of charge or for symbolic consideration, it acts as a final consumer and the reverse charge does not apply. For a student residence to qualify for the reduced rate of 10%, more than 50% of its surface area must be allocated to housing.

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