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V0943-18 11 April 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Reverse charge mechanism applies to mixed contracts if construction work is not significantly irrelevant

A wind farm subcontractor has enquired whether their professional services and supplies are subject to the reverse charge mechanism. The DGT has ruled that this rule applies if the works are considered construction work or if they form part of a mixed contract where the construction element is not insignificant.

The question raised

Application of the reverse charge rule for the taxable person under Value Added Tax.

The DGT's ruling

The reverse charge mechanism applies to the taxable person when the contract is for the execution of works within the framework of urbanization or construction. In mixed contracts that include services and works for a single price, the reverse charge applies to the entire operation if the works execution component is not significantly irrelevant. Services for permits or environmental studies, or the supply of wind turbines without assembly, do not constitute execution of works in themselves.

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