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V1140-22 20 May 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party not applicable to sidewalk repairs not part of an urbanisation or building

A company inquired whether repairing a public sidewalk allowed the inversion of the passive party for VAT. The DGT responded that it does not, as the work does not constitute an urbanisation of land or the construction or rehabilitation of buildings.

The question raised

Reverse charge mechanism in Value Added Tax corresponding to certain works carried out for the applicant by its suppliers.

The DGT's ruling

The reverse charge mechanism for the taxable person only applies when the main contract's object is the urban development of land or the construction or rehabilitation of buildings. In the case of sidewalk repairs, the rule does not apply if the work is not carried out within the framework of a land urbanization process nor does it involve a substantial reform or renovation of already urbanized land. Therefore, the reverse charge mechanism is not applicable at any stage of the chain for this type of contract.

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