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V1280-17 25 May 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución de obra

The nature of the transaction (supply of goods or provision of services) depends on the value of the materials supplied

A query was raised regarding whether the manufacture of medicines through the supply of materials by a distributor constitutes a supply of goods or a provision of services. The DGT ruled that the classification depends on the relative importance of the value of the materials supplied by each party in relation to the final value of the product.

The question raised

The question is raised as to when it constitutes a contract for work resulting in a supply of goods, and when it constitutes a provision of services, if the materials provided by the distributor are between 33% and 66% of the total.

The DGT's ruling

To determine whether there is a supply of goods or a provision of services, the importance of the materials provided by each party must be assessed in each case. If the materials provided by the distributor represent a larger portion of the final product value compared to the materials from the manufacturer, it is understood that the manufacturer is providing a service. Likewise, if the value of the manufacturer's materials is greater than those of the distributor but lower than the production service costs, it is also considered a provision of services.

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