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V2909-20 25 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Inversion of the passive party applies to construction and rehabilitation works

A construction company asks whether it must apply the passive party's investment to works carried out by its subcontractors. The DGT responds that the mechanism applies to construction or rehabilitation works on buildings, regardless of their final use.

The question raised

Applicability of the reverse charge mechanism under Article 84.One.2º.f) of Law 37/1992, on Value Added Tax, regarding the invoicing of works performed by subcontractors for the applicant.

The DGT's ruling

The reverse charge mechanism applies when the recipient is a business or professional and the transaction consists of the execution of works for urbanization, construction, or rehabilitation. This mechanism extends to subcontractors when the works are a consequence of a main contract with the developer. The criterion applies to the construction of buildings regardless of their intended use, provided that the legal requirements are met.

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