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V0920-20 16 April 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party applies to construction or urbanisation works

A company asks whether installing machinery and electrical connections at an ITV station allows the application of the passive party's investment. The DGT responds that it applies whenever the works constitute execution of construction and are carried out within a construction, building rehabilitation or land urbanisation project.

The question raised

Application of the reverse charge mechanism provided for in Article 84.One.2.f) of the Value Added Tax Law.

The DGT's ruling

The reverse charge mechanism applies when the recipient is a taxable person, the transaction constitutes a work of construction, and it is carried out within the framework of construction, rehabilitation, or urban development. A work of construction implies obtaining a result (a good distinct from the materials used) and not merely the provision of a continuous service. In the specific case, the anchoring, cabling, and machinery installation works shall apply the reverse charge if they are legally classified as a work of construction and form part of the building or urban development project.

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