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V1197-24 27 May 2024 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución de obra

The 10% VAT rate on renovation works depends on suitability for residential use and compliance with renovation requirements

A company inquires about the VAT rate applicable to the renovation of a premises to convert it into four rental dwellings. The DGT explains that to apply the reduced rate of 10%, specific renovation and residential suitability requirements must be met.

The question raised

Question posed: The Value Added Tax rate applicable to said execution of works.

The DGT's ruling

The reduced rate of 10% applies to construction or renovation works of buildings primarily intended for residential use (at least 50% of the surface area). For the renovation to qualify for the reduced rate, it must meet the reconstruction and cost requirements established by law. Furthermore, the building must be suitable for residential use, possessing a certificate of habitability or a first occupancy license. If these requirements are not met, the general rate of 21% shall apply.

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