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V3720-16 5 September 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Reverse charge mechanism applies to construction and renovation works

A company has requested clarification on whether the reverse charge mechanism applies to the construction of a nursing home. The DGT has ruled that this mechanism is applicable provided that all legal requirements under VAT regulations are met.

The question raised

Whether the application of the reverse charge mechanism contained in Article 84.One.2, letter f) of Law 37/1992 is appropriate.

The DGT's ruling

The reverse charge mechanism applies to works contracts, with or without materials, when the object of the contract is the urbanization of land or the construction or rehabilitation of buildings. The recipient must act as a businessperson or professional. The mechanism also applies when the operations are carried out for a main contractor or subcontractors derived from a main contract of this type. It is necessary that the work as a whole is classified as construction, rehabilitation, or urbanization.

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