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V0235-24 29 February 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo reducido

10% reduced VAT rate applies to garage renovation works in property communities

A company asks whether paving, waterproofing and lighting works in a property community's garages can be taxed at the reduced VAT rate and whether the taxpayer's investment applies. The DGT confirms that such works can be taxed at 10% if they are considered renovation and repair works under certain material limits, and that the taxpayer's investment applies to invoices issued to the main contractor.

The question raised

To determine whether said work can be considered rehabilitation for the purposes of applying the reduced rate of Value Added Tax. Furthermore, whether the reverse charge mechanism of said Tax is applicable to the subcontractors hired by the applicant for the execution of the works.

The DGT's ruling

Works in garages of buildings primarily intended for residential use (at least 50% of surface area) may be taxed at 10% if they fall under rehabilitation or renovation and repair. For renovation, the cost of materials supplied must not exceed 40% of the taxable base. The reverse charge mechanism applies to invoices from subcontractors to the main contractor if the overall work is rehabilitation, but not between the contractor and the homeowners' association as the latter is not a taxable person.

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