In order to combat fraud in the construction sector and to put an end to a distortion of competition to the detriment of subcontracting companies that comply with their tax obligations, a special reverse charge mechanism has been introduced for construction work, including repair, cleaning, maintenance, alteration and demolition work carried out in connection with real estate by a subcontractor.
The reverse charge measure only applies to real estate work carried out by a subcontractor regardless of its rank in case of chain subcontracting.
Subcontracting is defined as "the operation by which a contractor entrusts by a sub-contract, and under its responsibility, to another person called a subcontractor the performance of all or part of the contract of enterprise or part of the public contract concluded with the contracting authority".
The VAT relating to the transactions is paid by the recipient. The invoice for the transactions concerned by the reverse charge does not mention the VAT due. However, it must clearly show that the VAT is due by the taxable customer and mention “autoliquidation” or “reverse charge”.