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V2605-20 31 July 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo

Improvement works contracted directly with the builder are subject to 21% VAT

A taxpayer has enquired about the VAT rate applicable to electrical works carried out in a property under construction that they intend to purchase. The Directorate General for Taxes (DGT) has ruled that, as the works were not contracted with the developer and do not meet the requirements for renovation, the standard rate applies.

The question raised

VAT rate applicable to the works carried out by the electrician for the taxpayer.

The DGT's ruling

Improvement works are not taxed at 10% because they are not carried out by the developer in a dwelling pending delivery. The reduced construction rate is also not applicable because there is no direct contract between the developer and the contractor, as the builder invoices the acquirer directly. Finally, the renovation rate does not apply because the dwelling has not completed its construction at least two years ago. Therefore, the works are taxed at 21%.

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