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V1483-16 7 April 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Reverse charge mechanism may apply to extension and renovation works if classified as building rehabilitation

A hotel entity has requested clarification on whether increasing capacity and renovating bathrooms are subject to the reverse charge mechanism. The DGT indicates that this depends on whether the works meet the legal requirements to be classified as building rehabilitation.

The question raised

Application of the reverse charge mechanism for the taxable person contained in Article 84.One.2, letter f) of Law 37/1992.

The DGT's ruling

The reverse charge mechanism for the taxable person under Article 84.One.2.f) of Law 37/1992 is applicable to works involving expansion and renovation, provided they are carried out within the framework of a rehabilitation project. To this end, the requirements of Article 20.One.22 must be met, such as the primary object being reconstruction and the cost exceeding 25% of the building's value.

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