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V0655-22 25 March 2022 · 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 taxpayer queried which VAT rate applies to interior renovation works in a dwelling. The DGT indicates that, provided it is not a building rehabilitation, the 10% rate applies as long as the recipient is an individual or a community of owners and the cost of materials supplied does not exceed 40% of the taxable base.

The question raised

Value Added Tax rate applicable to the described transactions.

The DGT's ruling

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

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