VAT treatment of the formwork design

 In TAX NEWS

Binding tax ruling V2176-17, issued by the Spanish General Tax Sub-directorate last November 28, 2017.

The consultant company provides engineering services consisting in the design of metal molds (formworks) for the manufacture of large prefabricated of concrete. Molds designing will be used to produce beams of concrete of a building situated outside Spain.

The recipient of the service is a Spanish company that will manufacture the mold out of Spain, and from manufactured mold gets a prefabricated which will be used for the construction of a building outside Spain.

Article 70.One.1st of the Spanish VAT Law, provides a special location rule for real estate-related services, including the services of preparation or coordination of works of construction, such as provided by architects, being such services located in the place where the real estate is situated.

In this regard, it should be noted that the European Court of Justice ruled on these services in the their sentence Heger Rudi GMBH (case 166/05) establishing that are only covered by this location rule those services that have a connection sufficiently direct with real estate. In this judgment concludes the Court that the controversial provision of services is directly related to real estate that, given the characteristics of the service, “is a central and indispensable element of the above-mentioned provision”.

In this sense, article 31 bis of the EU Regulation of execution no. 282/2011 clarifies that:

It means services sufficiently linked to real estate, in particular:

(a) the layout of drawings for a building or parts of a building to be built in a given field, regardless of that construction takes place;

(b) the provision of services on-site security or surveillance;

(c) the construction of a building on land, as well as construction and demolition works executed in a building or parts thereof;

(d) the construction of permanent structures on ground, as well as the construction and demolition works in permanent structures such as networks of pipelines for gas, water, wastewater, and similar;

According to the mentioned in the previous article, the engineering services provided by the consultant company consisting of the design of metal molds (formworks) for the industrialized manufacture of large prefabricated of concrete do not have the consideration of services related to real estate so it will be located by application of the general rule of article 69.One.1st of the Spanish VAT Law.

Therefore, being the recipient of the service a Spanish company, this service will be located in the Spanish VAT territory and not on the place where the building is located.

Click here if you want more information about our VAT services or you can contact us at info@diligens.es

cv 3087 17

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