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A query was raised regarding how to calculate material costs to apply the 10% reduced VAT rate to residential renovation works. The DGT ruled that to verify this limit, the cost of acquisition or production of materials for the contractor must be used, regardless of the selling price invoiced to the client.
This ruling clarifies the calculation method for VAT purposes in renovation projects, ensuring that contractors use their actual procurement costs rather than the retail price to determine eligibility for the reduced rate.
The tax team reviews your specific situation.
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