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V2717-21 8 November 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of passive party applies to demolition and accessory projects in urbanisation

A local council asks whether the passive party's investment applies to demolition, works management and contracting within a urbanistic cooperation system. The DGT confirms it does, if such activities are considered accessory works or services within an urbanisation process.

The question raised

Whether the reverse charge mechanism provided for in Article 84.One.f) of Law 37/1992 is applicable to demolition projects, works management, and the contracting of demolition works.

The DGT's ruling

The reverse charge mechanism applies when the work as a whole constitutes urbanization, construction, or rehabilitation. Demolition works, including management and design if they are ancillary to a mixed contract, are considered execution of works. For this to apply, the recipient must act as a business or professional and communicate such status. In the cooperation system, urbanization levies, including those for prior expenses, are subject to this rule if the owners act as businesses.

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