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A catering company has enquired whether installing a kitchen during a comprehensive premises renovation allows for the application of the reverse charge mechanism. The DGT indicates that this mechanism applies provided the works meet the requirements for building renovation and construction works.
Question raised: Application of the reverse charge mechanism rule.
The reverse charge mechanism applies when the recipient is a business or professional and the operations consist of works for urbanization, construction, or building rehabilitation. For it to be considered rehabilitation, the main object must be reconstruction (more than 50% of the cost in structural elements, facades, or roofs) and the cost must exceed 25% of the value of the building. The execution of works implies obtaining a good distinct from the materials used.
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