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V5449-26 6 August 2026 · SG de Impuestos sobre el Consumo Criterion in force
IVA · obras de rehabilitación

10% VAT rate for renovation works requires suitability for residential use and compliance with cost and nature requirements

A property owner inquired whether renovation works on a farmhouse intended for tourist rentals qualify for the 10% VAT rate. The DGT ruled that the inquirer is considered a business entity and that the reduced rate depends on whether the building is suitable for residential use and meets the qualitative and quantitative requirements for renovation.

The question raised

Whether the rehabilitation works to be carried out would be considered rehabilitation works and, where applicable, the Value Added Tax rate applicable to them.

The DGT's ruling

To apply the 10% rate for rehabilitation, the building must be suitable for residential use, which is determined by its design, construction, and legal purpose, without the certificate of habitability being mandatory. The works must meet a qualitative requirement (more than 50% of the cost in structural elements, facades, or roofs, or analogous/related elements) and a quantitative requirement (cost exceeding 25% of the value of the building excluding the land). If the works are for renovation or repair, the reduced rate would not apply if they are intended for tourist leasing.

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