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V0434-18 20 February 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo

Renovation works subject to 21% VAT if owner is a business or renovation/rehabilitation requirements are not met

A renovation company has requested clarification on the applicable VAT rate in two scenarios: works for a holiday rental property and works for a private residence that may be rented out later. The DGT clarifies that the rate depends on whether the owner is a business entity and whether the specific requirements for rehabilitation or renovation are satisfied.

The question raised

Applicable tax rate for the works mentioned, taking into account the aforementioned possibilities regarding the private or non-private use of the dwelling in the two cited cases.

The DGT's ruling

If the owner carries out works to rent the dwelling, they hold the status of an entrepreneur and the works are taxed at 21% unless they are renovation works. For renovation works to be taxed at 10%, the recipient must be a natural person who is not an entrepreneur and uses the dwelling for private use. In the latter case, two years must have elapsed since the construction/renovation and the cost of materials cannot exceed 40% of the tax base.

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