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V0474-20 27 February 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo reducido

10% reduced VAT rate applies to renovation works if material costs do not exceed 40% of the taxable base

A renovation company has requested clarification on the VAT rate applicable to electrical, plumbing, masonry, and painting services. The DGT clarifies that, provided the works do not qualify as rehabilitation projects, they may be taxed at the 10% rate if the recipient is an individual or a community of owners and the cost of materials does not exceed 40% of the taxable base.

The question raised

Type of Value Added Tax applicable to the described transactions.

The DGT's ruling

To apply the reduced rate of 10% to renovation and repair works in dwellings, the recipient must be a natural person for private use or a community of property owners. The construction or rehabilitation of the dwelling must have been completed at least two years prior to the commencement of the works. Furthermore, the cost of materials provided by the professional, including subcontracting, must not exceed 40% of the taxable base of the transaction; otherwise, the general rate of 21% shall apply.

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