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V1094-14 15 April 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Reverse charge mechanism for drilling services 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 a land urbanisation process or the construction or renovation of buildings.

The question raised

Treatment of said operations for Value Added Tax purposes.

The DGT's ruling

The reverse charge mechanism under Article 84.One.2º.f) of Law 37/1992 does not apply if the principal contract does not have as its object the urbanization of land or the construction or rehabilitation of buildings. For the mechanism to proceed, the drilling must be carried out within the scope of said processes and comply with the other legal requirements. If the principal contract is not of that nature, the reverse charge rule does not apply.

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