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V2657-20 14 August 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo reducido

Alarm installation subject to 21% VAT if equipment costs exceed 40% of the taxable base

A security company has requested clarification on whether installing alarm systems in homes qualifies for the reduced 10% VAT rate. The DGT has ruled that if the equipment is considered supplied materials and its cost exceeds 40% of the taxable base, the standard 21% rate will apply.

The question raised

Application of the reduced rate of 10 percent of Value Added Tax established in Article 91.One.2.10º of Law 37/1992 to the installation of alarm equipment.

The DGT's ruling

To apply the 10% rate to renovation works, the cost of the materials provided must not exceed 40% of the taxable base. If the alarm equipment becomes incorporated into the property and its cost exceeds said limit, the transaction shall be taxed at 21%. However, if the installation is ancillary to the main monitoring service, it shall follow the tax regime of the latter.

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