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V3182-18 13 December 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Application of passive investor investment in construction and prorata VAT deduction requirement

A non-resident operating rural properties seeks advice on passive investor investment in a building, the taxation of contributing such a building to a society, and the right to VAT deduction. The DGT determines that the consultant is a Spanish established entrepreneur and that the prorata rule must be applied for VAT deduction.

The question raised

Application of the reverse charge mechanism scenario contained in Article 84.One.2º f) of Law 37/1992. Right to deduct the input VAT paid for the construction of the warehouse, as well as the taxation of the non-monetary contribution.

The DGT's ruling

The reverse charge mechanism for the taxable person applies to the construction works of the warehouse if the requirements of Article 84.One.2º f) of Law 37/1992 are met. The non-monetary contribution of the warehouse to the commercial company constitutes a supply of goods subject to VAT. The lease of the rural estate is exempt from VAT. Since the taxpayer carries out operations with a right to deduction and others that are exempt, the pro rata rule must be applied to determine the right to deduct the input tax paid.

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