What VAT (IVA) rate do you pay in Spain for home renovation work? The reduced 10% rate, or the standard 21% rate?

home renovation in Spain VAT / IVA reduced rate of 10% in place of the standard 21%
The high material costs in this renovation meant the job had IVA / VAT at 21%

It depends on whether the job complies with conditions required for paying the reduced rate. Given the cost of many renovations, it can make a big difference.

If you meet the conditions for the reduced rate you can ask your builder to charge you VAT of 10% on the work, in place of the standard rate of 21%. VAT in Spanish is known as IVA.

For a renovation project costing €10,000 that would mean IVA of €1,000 rather than €2,100, a saving of €1,100 for you.

To get the reduced rate you have to hire a VAT registered builder or contractor. You can’t get a reduced rate on building materials if it’s a DIY job. Also, it has to be your primary residence, not a holiday home.

The other conditions you need to meet to get the reduced rate of 10% IVA/VAT on home renovations in Spain are as follows:

  1. The property was not built or renovated in the last two years.
  2. The client has to be the person living in the home (or the Community of Owners when renovating common areas).
  3. The building material costs cannot be more than 40% of the total cost of the work.

A typical renovation job that meets the conditions above would be re-plastering and repainting, perhaps with some kitchen and bathroom improvements. A total home refurbishment typically involves building material costs above 40% of the total cost of renovation, and does not qualify for the reduced IVA rate of 10% and attracts the standard rate of 21%, as I found when I renovated my flat in Barcelona,

If your renovation job meets the conditions above you can ask your builder to invoice you with VAT at 10%. Your builder, in turn, can ask you for a written declaration confirming your compliance with the requirements.

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