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V4802-16 8 November 2016 · SG de Impuestos sobre el Consumo Criterion in force
IVA · inversión del sujeto pasivo

Reverse charge mechanism does not apply to square renovation works unless they qualify as urbanisation, construction or rehabilitation

A main contractor has enquired whether the reverse charge mechanism should be applied to works carried out by its subcontractors. The DGT has ruled that it only applies if the works qualify as land urbanisation, construction, or the rehabilitation of buildings.

The question raised

Application of the reverse charge rule for the taxable person in the performance of the works mentioned, which are to be carried out by subcontractors for the benefit of the applicant.

The DGT's ruling

The reverse charge mechanism for the taxable person applies only if the main contract's object is the urbanisation of land, the construction, or the rehabilitation of buildings. In the case of the remodeling of a municipal square involving paving, channeling, or tree planting, the reverse charge does not apply if the action does not qualify as urbanisation of land or as the construction or rehabilitation of buildings.

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