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V0884-20 15 April 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of passive party applies to electrical works in land urbanisation

A Compensation Board inquires whether electrical network improvement works are subject to passive party investment. The DGT confirms this mechanism applies where works are part of a land urbanisation process.

The question raised

Whether the reverse charge mechanism of Value Added Tax, as provided for in Article 84.One.2.f) of Law 37/1992, would apply to said execution of works.

The DGT's ruling

The reverse charge mechanism applies when the recipient is a business or professional, the operations consist of works (with or without materials), and their purpose is the urbanisation of land or the construction/rehabilitation of buildings. In the case of a Compensation Board, it acts as the main contractor for the urbanisation works it carries out in its own name but on behalf of the developers. Therefore, the works for the adaptation of electrical installations carried out for the Board in an urbanisation process trigger this mechanism.

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