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V2250-20 1 July 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · ejecución de obra

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

An individual has requested clarification on the VAT rate applicable to works converting a commercial premises into a residential property. The DGT explains that the 10% reduced rate may be applied if the works constitute renovation or refurbishment and meet specific legal requirements.

The question raised

Type of Value Added Tax applicable to said execution of works.

The DGT's ruling

To apply the reduced rate of 10% for rehabilitations, the works must be qualitatively characterized by the consolidation or treatment of structural elements, facades, or roofs (more than 50% of the cost) and quantitatively exceed 25% of the property value. In renovation and repair works, the recipient must be a natural person for private use, the construction must be at least two years old, and the cost of materials must not exceed 40% of the taxable base. If these requirements are not met, the general rate of 21% shall apply.

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