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V2053-16 12 May 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Reverse charge mechanism applied to construction or building renovation works

The taxpayer queried the requirements for applying the reverse charge mechanism to demolition services and works for concessionaires. The DGT clarifies that this mechanism applies to contracts for urbanisation, construction, or building renovation carried out between businesses or professionals.

The question raised

Reverse charge mechanism in performance of work for public works concessionaires and the requirements their clients must meet or prove for the application of said mechanism.

The DGT's ruling

The reverse charge mechanism applies when the recipient is a businessperson or professional and the transaction is a performance of work (with or without materials) for the urbanization, construction, or rehabilitation of buildings. This mechanism extends to subcontractors if the main contract has such activities as its object. It does not apply if the main contract does not have construction or rehabilitation as its object, nor to maintenance, repair, or conservation services.

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