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V0900-24 23 April 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución de obra

Reduced 10% VAT rate applies to residential renovation or refurbishment works subject to specific requirements

An association has requested clarification on the VAT rate applicable to construction works carried out at its social care centres. The DGT has ruled that a 10% rate applies if the works qualify as the refurbishment of buildings primarily intended for residential use, or if they constitute renovations or repairs that meet the statutory requirements.

The question raised

Question raised: For the purposes of Value Added Tax, the applicable tax rate for the execution of works.

The DGT's ruling

Rehabilitation works on buildings primarily intended for housing (more than 50% of the surface area) are taxed at 10% if direct contracts are formalized between the developer and the contractor. On the other hand, renovation and repair works in dwellings are taxed at 10% if the recipient is a natural person or a community of owners, the building is at least two years old, and the cost of materials does not exceed 40% of the taxable base. If said material limit is exceeded, the general rate of 21% applies.

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