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V2721-20 4 September 2020 · SG de Impuestos sobre el Consumo Criterion in force
IVA · tipo impositivo reducido

Contractors must independently verify eligibility for the 10% reduced VAT rate on home renovations

An individual enquired whether, when hiring multiple companies for home renovations, each company must separately determine if it meets the requirements to apply the reduced VAT rate. The Directorate-General for Taxes (DGT) responded that, as these are independent works contracted directly, each contractor must autonomously verify compliance with the legal requirements.

The question raised

It is questioned whether each of the companies with which the applicant contracts must independently determine whether the requirements for the application of the reduced tax rate provided for in Article 91.One.2.10º of the Value Added Tax Law are met.

The DGT's ruling

If renovation works are contracted independently with different contractors, each must determine on its own whether the requirements of Article 91.One.2.10º of the VAT Law are met to apply the 10% rate. In the case of kitchen furniture installation, furniture and countertops are considered supplied materials if they are incorporated into the building. The delivery of household appliances shall always be taxed at the general rate of 21%, even if carried out jointly with the renovation works.

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