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V2312-16 25 May 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · promotor delegado

Reverse charge mechanism applies to real estate development works carried out by a delegated developer

A construction company acting as a delegated developer has requested clarification regarding its status as a developer, the applicable tax rate, and the identity of the taxable person. The DGT has determined that the company acts as the main contractor and that the reverse charge mechanism applies to its operations.

The question raised

Status of main contractor. Tax rate. Taxable person.

The DGT's ruling

The delegated developer, by not holding title to the work, more closely resembles a main contractor than a developer. The reverse charge mechanism applies to the operations carried out by the contractor for the developer-investor, as well as to those carried out by subcontractors for the main contractor. Works primarily intended for housing are taxed at 10%, whereas the delivery of an ongoing development is taxed at 21%.

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