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V1408-18 29 May 2018 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo reducido

Reduced 10% VAT rate applies to renovation works subject to qualitative and quantitative requirements

A company has requested clarification on whether improvement works carried out on an acquired property can be taxed at the 10% VAT rate. The DGT has ruled that this reduced rate applies only if the works are classified as renovation, meeting specific criteria regarding cost and the nature of the works.

The question raised

Applicability of the reduced tax rate of 10 percent to works carried out on housing, pursuant to Article 91.One.3.1º of Law 37/1992.

The DGT's ruling

To apply the 10% rate, the works must consist of the rehabilitation of buildings primarily intended for residential use. This requires meeting a qualitative requirement (more than 50% of the cost in consolidation, structural, analogous, or related works) and a quantitative requirement (the cost of the works must exceed 25% of the value of the building excluding the land). If these requirements are not met, the general rate of 21% shall apply.

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