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V1718-17 4 July 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo reducido

10% reduced VAT rate applies to window installation if material costs do not exceed 40% of the taxable base

The taxpayer inquires about the applicable VAT rate for window installation in a residential property and how to determine if material costs exceed 40% of the taxable base. The DGT rules that the 10% reduced rate may be applied provided the renovation requirements are met and the cost of the incorporated materials does not exceed the specified limit.

The question raised

Applicable tax rate for renovation works for the installation of windows and exterior joinery in a private dwelling, and the method for determining whether the cost of materials reaches 40 percent of the tax base of the operation.

The DGT's ruling

The installation of windows and exterior joinery is considered renovation and repair subject to the 10% rate if the recipient is an individual or a community of property owners, the dwelling is at least two years old, and the cost of the materials provided does not exceed 40% of the tax base. Materials are the goods that are materially incorporated into the building, including subcontracted works, but excluding means of production such as scaffolding or tools. If the entrepreneur is a manufacturer, the cost of the materials shall be their production cost.

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