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.
To get the reduced rate of 10% IVA/VAT on home refurbishment or reforms, the renovation work has to be done on a property you use privately, for example your main home or second home. You can’t get the reduced rate renovating a property you rent out.
Other conditions you need to satisfy to get the reduced rate of 10% IVA/VAT on home renovations
The other conditions you need to meet to get the reduced rate of 10% IVA/VAT on home renovations in Spain are as follows:
- The property was not built or renovated in the last two years.
- The client has to be the person living in the home (or the Community of Owners when renovating common areas).
- 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.
