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A farmer enquires about the VAT rate applicable to stone bank rehabilitation and improvement services. The DGT confirms that a reduced rate of 10% applies if the service constitutes abancalamiento and is essential for the agricultural operation.
Question raised: The applicable VAT rate for the rehabilitation of terraces in a field is being questioned.
Services for the rehabilitation and improvement of terraces fall within the concept of terracing of agricultural land. To apply the reduced rate of 10%, three requirements must be met: that the provision is listed in the law, that it is carried out in favor of a holder of an agricultural, forestry, or livestock holding, and that it is necessary for its development. If the terracing is not necessary for the holding or has an ornamental or recreational purpose, the general rate of 21% shall apply.
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