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V2376-17 18 September 2017 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo reducido

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

A carpentry company has enquired whether the installation of doors, windows, and kitchen furniture can qualify for the reduced 10% VAT rate. The Directorate General for Taxes (DGT) has ruled that such works may apply the reduced rate provided they meet the requirements for home renovation and the cost of materials does not exceed 40% of the taxable base.

The question raised

Whether the reduced rate of 10 percent is applicable to the installation works of doors, windows, kitchen furniture, etc., which in all cases remain attached to the building, and whose materials, in some cases, do not exceed 40 percent of the taxable base of the operation.

The DGT's ruling

The installation of furniture, doors, or windows is considered renovation and repair if the recipient is an individual or a community of property owners and the dwelling is at least two years old. The 10% rate is only applicable if the cost of the materials provided (including the furniture itself and subcontracted works) does not exceed 40% of the taxable base. If this limit is exceeded, the operation is classified as a supply of goods and is taxed at the general rate of 21%.

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