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V2209-21 31 July 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive subject does not apply to public bodies not acting as entrepreneurs

A renovation company asks whether it must apply the inversion of the passive subject to public bodies and its subcontractors. The tax authority confirms that inversion does not apply to public bodies since they are not entrepreneurs, but it does apply to subcontractors if legal requirements are met.

The question raised

Question posed: Application of the reverse charge mechanism by the taxable person to the works performed by subcontractors for the consulting company.

The DGT's ruling

The reverse charge mechanism does not apply to the relationship between the taxpayer and the public entity because the latter does not act as an entrepreneur or professional. However, the reverse charge mechanism does apply to the works carried out by subcontractors for the taxpayer, provided that the legal requirements are met. The taxpayer must formally notify its subcontractors that the operations are carried out within a process of urbanization, construction, or rehabilitation.

Apply this to a real case

What is published here, applied to a company or a specific case. The first meeting is free.

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