Do Reforms at home It is a great disbursement for the owners and more considering that not only have to pay the materials or the construction company, but also to pay the VAT of the operation. However, as explained from the Treasury, although the usual thing is to pay 21% for these reforms, there are some cases in which the owners may save VAT paying the reduced type.
The State Agency for the Tax Administration (AEAT) provides some cases in which the owners will only pay 10% VAT for the reform of the property, as long as they meet a series of requirements established in the Article 91 of the Value Added Tax Law which determines what operations can apply reduced types.
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Conditions to apply reduced VAT in renewal or repair works in homes
In most cases, according to the Tax Agency through its website, renewal or repair works in private homes tax, as a general rule, 21% VAT. However, it is possible to apply a reduced type of 10% if certain criteria established in the law are met.
The first condition is that housing must be destined for particular use and the beneficiary must be a natural person. This reduced type does not apply when it is destined for rent or business or professional activities, even partially.
In addition, the construction or rehabilitation of the property must have ended at least two years before the start of the reform works. This means that only those homes with some age can be accepted to reduced VAT since an important rehabilitation was built or made in it.
Finally, the company carried out by the work cannot contribute materials for a value of more than 40% of the total amount of the invoice. If this percentage is exceeded, the work must pay in its entirety to the general type of 21%.
For example, according to the Treasury, if the reform of a land has a total cost of 10,000 euros and the materials provided by the company total 3,000 euros, the entire operation can benefit from reduced VAT because it is less than 40%. On the other hand, if the value of the materials provided is 5,000 euros, the reform must pay 21%.
It is important to note that these conditions are applicable in cases of repair and renewal works that focus in general to improve and fix housing problems, not for the cases of construction and repair works that require construction of new structures or the modification of existing ones, which are governed by other criteria.