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V3253-18 20 December 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Reverse charge mechanism applied to urbanisation, construction, or building renovation works

A company has enquired whether the reverse charge mechanism applies to renovation works on its building, including the installation of a lift. The DGT has ruled that it shall apply if the works qualify as construction or building renovation under the criteria set out in the VAT Act.

The question raised

Question raised: Whether the reverse charge mechanism rule mentioned is applicable in the execution of works.

The DGT's ruling

The reverse charge mechanism applies when the recipient is a business or professional and the works consist of urbanization, construction, or building rehabilitation. For it to be considered rehabilitation, the main object must be reconstruction (more than 50% of the cost in structural elements, facades, or roofs) and the total cost must exceed 25% of the value of the building excluding the land. Maintenance or repair works are excluded, but additions or improvements that increase the value are included if they form part of a rehabilitation.

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What is published here, applied to a company or a specific case. The first meeting is free.

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