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V2509-19 17 September 2019 · SG de Impuestos sobre el Consumo Criterion in force
IVA · localización de las prestaciones

Plumbing and HVAC services in Canary Islands properties are not subject to VAT but allow for deduction

An installation company has enquired whether it must charge VAT to a mainland client for works carried out on properties located in the Canary Islands. The DGT has ruled that, as the properties are situated in the Canary Islands, the transaction is not subject to state VAT, although it does allow for the deduction of the tax incurred.

The question raised

Clarification of the binding ruling dated January 3, 2019, inquiry number V0025-19. Specifically, whether the applicant must invoice the client in the mainland with the application of Value Added Tax and whether such operations give rise to the right to deduction, even if they are not subject to said tax.

The DGT's ruling

Services related to real estate are considered to be performed in the location where they are situated. As these involve installations in real estate located in the Canary Islands, the provision is not subject to VAT in the territory where the tax applies. Nevertheless, these operations give rise to the right to deduct the VAT incurred insofar as they would have given rise to such a right had they been performed in the territory where the tax applies.

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