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V1629-22 6 July 2022 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución de obra

VAT rate for renovation works depends on classification as construction, rehabilitation or renewal

A company asks what VAT rate applies to renovation works carried out on a building intended for temporary residence by a non-resident. The DGT explains the conditions under which the reduced 10% VAT rate applies based on the nature of the work.

The question raised

Value Added Tax rate applicable to said execution of works.

The DGT's ruling

The reduced rate of 10% applies to construction or building rehabilitation works primarily intended for residential use (at least 50% of the surface area). For rehabilitation works, the main purpose must be reconstruction and the cost must exceed 25% of the building value. In the case of renovation and repair works, the recipient must be a natural person or a community of owners, the dwelling must be at least two years old, and the cost of the materials supplied cannot exceed 40% of the taxable base.

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