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V0670-22 28 March 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo reducido

10% reduced VAT rate applicable to renovation works if material costs do not exceed 40%

A private individual has requested clarification on the VAT rate applicable to the renovation of their primary residence, which involves structural consolidation and the demolition of certain rooms. The Directorate-General for Taxes (DGT) indicates that if the works do not qualify as construction or rehabilitation, they may be taxed at the 10% rate as renovation and repair works, provided specific requirements regarding usage and material costs are met.

The question raised

Tax rate applicable to said works for Value Added Tax purposes.

The DGT's ruling

Renovation and repair works on dwellings intended for private use may be taxed at 10% if the recipient is not a business person, the dwelling was constructed more than two years ago, and the cost of the materials supplied does not exceed 40% of the taxable base. If the cost of the materials exceeds said limit, the general rate of 21% shall apply to the total execution. To certify the private use and the age of the dwelling, a written declaration signed by the recipient shall suffice.

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