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V0387-21 25 February 2021 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo reducido

10% reduced VAT rate applies to renovation works if at least 50% of the area is for residential use

A query was made regarding the VAT rate applicable to renovation works in a parish centre. The Directorate General for Taxes (DGT) ruled that the 10% reduced rate only applies if the building is primarily intended for residential purposes, requiring at least 50% of the built area to be used for such purposes.

The question raised

Value Added Tax rate applicable to the described works.

The DGT's ruling

To apply the reduced rate of 10% to construction or renovation works, the building must be primarily intended for residential use, meaning that at least 50% of the constructed surface area is allocated to this use. In the case of a parish center, if the part intended for housing does not represent more than 50% of the total surface area, the general rate of 21% shall apply. Furthermore, for the works to be classified as renovation, they must meet specific requirements regarding cost and the nature of the works.

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