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V2245-14 2 September 2014 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Enterprise owners must apply passive investor investment to urbanisation payments

A municipality asks whether VAT should be charged on urbanisation payments under a cooperative system. The DGT replies that, if owners are entrepreneurs, passive investor investment applies.

The question raised

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

The DGT's ruling

The City Council acts as the main contractor for the urbanization works. Owners who are entrepreneurs or professionals, or who acquire such status upon receiving assessments with the intention of allocating the land to business activity, shall be taxpayers under the reverse charge mechanism. This includes expenses prior to the material execution of the works, such as legal or architectural services. Owners must formally communicate their status as entrepreneurs for this mechanism to apply.

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