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V2491-23 18 September 2023 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo reducido

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

A bathroom renovation company enquired about the applicable VAT rate when providing materials. The DGT ruled that the 10% reduced rate may be applied provided that the cost of the materials supplied does not exceed 40% of the transaction's taxable base.

The question raised

Applicable tax rate for Value Added Tax purposes.

The DGT's ruling

To apply the reduced rate of 10% to residential renovation works, the cost of materials provided by the professional must not exceed 40% of the taxable base. If this limit is exceeded, the general rate of 21% shall apply to the entire execution of the works. Materials include all tangible assets incorporated into the building, including subcontracted works. The cost of materials shall be their acquisition price or their production cost if manufactured by the company itself.

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