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A fiduciary compensation board asks whether the passive investor investment applies to urbanisation works it has contracted. The DGT clarifies that this mechanism applies when specific conditions regarding the contractor's status as an entrepreneur and the nature of the work are met.
Question posed: Application of the reverse charge mechanism contained in Article 84.One2, letter f) of Law 37/1992.
The reverse charge mechanism applies if the recipient acts as a business or professional and the transaction constitutes the execution of urbanization, construction, or rehabilitation works. The mechanism extends to subcontractors if the work is a consequence of a main contract between a developer and a contractor with said purpose. For public entities or associations, it is necessary that they reliably communicate their status as businesses for the reverse charge to apply.
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