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V1053-14 14 April 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Reverse charge mechanism for drilling does not apply if the main contract is not for urbanisation or construction

A public works company has enquired whether its horizontal drilling services are subject to the VAT reverse charge mechanism. The DGT has ruled that this mechanism only applies if the operations are carried out within the framework of an urbanisation, construction, or building renovation process.

The question raised

Treatment of said operations for Value Added Tax purposes.

The DGT's ruling

The reverse charge mechanism does not apply when drilling services are provided within the framework of a main contract that does not have the purpose of land development or the construction or rehabilitation of buildings. This mechanism only applies if the operations are carried out within such processes and the requirements of Article 84.One.2º.f) of Law 37/1992 are met.

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