VAT treatment of the installation and assembly of office furniture
Binding tax ruling V4620-16, issued by the Spanish General Tax Directorate on October 31st 2016.
A company aimed to the supply and installation of office furniture, buying it disassembled to different suppliers and assembling it in the offices of its clients, has received from a promoting company in charge of the construction of an office building the order to supply and install the furniture for said Building (chairs, tables, bookcases, curtains, etc.).
The company wants to know if the application of the reverse charge rule would apply because it deals with goods that are object of installation and assembly.
At this point, it should be explained that Article 84.One.2º.f) of the Spanish VAT Law establishes that it will apply the reverse charge rule and, therefore, will be taxpayer of the transaction the entity that receives the service in the case of execution of works, with or without supply of goods, as well as the assignments of personnel for their realization, as a result of contracts directly formalized between the promoting entity and the contractor whose purpose is the urbanization of land or the construction or rehabilitation of buildings.
The provisions of the preceding paragraph shall also apply when the recipients of the operations are themselves the main contractor or other subcontractors under the conditions indicated.
This body wishes to mention that it should be taken into account that the reverse charge rule applies, first, when the work as a whole has been classified as building or rehabilitation of buildings or as urbanization of land. Secondly, it is mandatory that the total or partial contract or sub-contract resulting from the work as a whole is considered to be the execution of works and, finally, that the addressee acts as an entrepreneur or professional.
With respect to the first requirement, in the supply of goods that are the object of installation and assembly in buildings that are already finished or when such work is not a consequence of a process of rehabilitation of buildings, the reverse charge rule will not apply.
On the contrary, in the supply with installation of goods that are the object of installation and assembly in a building of new construction, for the promoting entity of the same, it can be of application of the reverse charge rule.
With respect to the requirement that the transaction be considered as execution of construction works, it should be clarified that the execution of construction works will be considered, among others, the supply of goods that are the object of installation and assembly.
In this sense, it should be taken into account that it cannot be considered as execution of construction works that have as purpose the urbanization of land or the construction or rehabilitation of buildings the delivery of movable property subject to installation or assembly that are not incorporated therein, even if, as mentioned, the assembly of the same is finalized at the place of delivery.
Therefore, in this case, the transaction must be considered as a mere supply of goods to which the reverse charge rule will not be applied, so that the consulting company must charge on the invoice the VAT at the general rate of 21 percent.