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V1627-22 6 July 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of passive party applies to construction works for land urbanisation

A municipality asks whether construction works for urbanisation awarded to a company are subject to passive party investment, regardless of financing. The DGT responds that this mechanism applies if legal requirements are met.

The question raised

Whether the reverse charge mechanism provided for in Article 84.One.2.f) of Law 37/1992 will apply to said executions of works, regardless of their method of financing.

The DGT's ruling

The reverse charge mechanism under Article 84.One.2.f) of Law 37/1992 applies when the recipient is a business or professional, the transaction constitutes the execution of works for urbanization, construction, or rehabilitation, and a direct contract exists between the developer and the contractor. In the case under consultation, the mechanism is applicable to land urbanization works carried out for the City Council, regardless of its method of financing.

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