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V2636-23 28 September 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Subject passive investment requires main work to be urbanisation, construction or rehabilitation

A company asks whether it must apply the subject passive investment mechanism for various construction and expansion works on its facilities. The DGT responds that for this mechanism to apply, the overall project must be urbanisation, construction or rehabilitation of buildings, and the contracts must be for works execution.

The question raised

Whether the reverse charge mechanism is applicable.

The DGT's ruling

The reverse charge mechanism requires that the recipient be a businessperson or professional and that the operations consist of works for urbanization, construction, or rehabilitation. For rehabilitation, the cost must exceed 25% of the building's value and its primary purpose must be reconstruction. The execution of works implies the obtaining of a good distinct from the materials used and must correspond to the concept of a contract for work under the Civil Code.

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