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V1277-14 13 May 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 real estate works

A horizontal drilling company has requested clarification on whether its services are subject to the VAT reverse charge mechanism. The DGT has ruled that this mechanism only applies if the drilling operations are part 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. For the reverse charge to proceed, the operations must be carried out within the scope of said processes and comply with the requirements of Article 84.One.2º.f) of Law 37/1992.

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