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V1493-22 22 June 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Receiver is VAT liable party if works are urbanisation, construction or rehabilitation

An electricity company asks whether it must apply the passive party's investment to connection and network installation works carried out for businesses. The DGT responds that investment only applies if the works qualify as urbanisation of land, construction or rehabilitation of buildings.

The question raised

Application of the reverse charge mechanism rule for Value Added Tax purposes to the works executed by the consultant.

The DGT's ruling

For the reverse charge mechanism to apply, the recipient must be a business or professional and the transaction must be an execution of works for urbanization, construction, or building rehabilitation. If the works do not qualify as the execution of real estate works or are not carried out as part of a land urbanization process, the consultant shall be the taxable person for the tax. In the case of electrical installations, the reverse charge applies if the work is for urbanization, but not if it involves the installation of bases, towers, insulators, or cables.

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