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A taxpayer inquired how to prove that a comprehensive renovation of a ruined house qualifies as a rehabilitation to apply the reduced VAT rate. The Directorate General for Taxes (DGT) explains that it must meet a primary object requirement (more than 50% of the cost must be spent on structural or analogous elements) and a cost requirement (the total cost must exceed 25% of the property's value, excluding the land).
This ruling clarifies the specific criteria for applying the reduced VAT rate to renovation projects, providing certainty for developers and taxpayers regarding the necessary expenditure thresholds and structural requirements.
The tax team reviews your specific situation.
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