VAT on renovations in Spain: 10 % or 21 %
Two invoices for the same kitchen can differ by eleven percentage points of tax without a single thing about the work having changed. What decides the rate is the building, the buyer and the proportion of materials — never the contractor.
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Short answer
When does the reduced 10 % rate apply?
A renovation of an existing home in Spain is taxed at 10 % VAT only when three conditions hold at once: the invoice goes to a private individual using the property as a home, or to a comunidad de propietarios; the building is more than two years old; and the contractor’s materials do not exceed 40 % of the taxable base. If one fails, the entire invoice moves to 21 %. On a 90 m² renovation — roughly €70,200 to €144,000 over 10–14 weeks — those eleven points are several thousand euros, which is why the question belongs in the quote.
A comunidad de propietarios is the owners’ association of a block of flats. Every owner belongs automatically, and it contracts work on the parts nobody owns alone.
| Situation | Rate |
|---|---|
| Flat over two years old, private owner, materials under 40 % | 10 % |
| Same flat, materials above 40 % of the taxable base | 21 % |
| Home less than two years old | 21 % |
| Invoice issued to a company that reclaims VAT | 21 % |
| Commercial premises or office, whatever its age | 21 % |
| Communal works ordered by the comunidad | 10 % |
The 40 % test
What counts as materials and what does not
The proportion is measured against the taxable base of that job, and nearly every argument about it is an argument about the numerator.
How the rule reads
- Materials supplied by the contractor count: tiles, flooring, sanitaryware, cabinets, joinery
- Labour, plant and site costs do not count
- Buy the materials yourself and the contract becomes a service: the proportion falls
- It is judged job by job, not across a year of work
Why kitchens and bathrooms are where this bites
They are the rooms where the weight of materials rises fastest. A mid-range carcass and appliance package can push the supplied materials past the threshold alone, moving the whole invoice — labour included — to 21 %. Buying the furniture separately from the building work is two genuinely different contracts and ordinary practice; cutting one job into several invoices to imitate that is exposure, not planning.
Always 21 %
Which jobs never reach the reduced rate
Some cases are excluded by definition, whatever the materials come to:
- Any property not used as a dwelling: shops, offices, storage units
- A home under two years old since construction or rehabilitation
- Work invoiced to a company or a professional who deducts the VAT
- New build and extensions adding floor area, under their own regime
Converting a shop into a flat
This one catches foreign buyers regularly. While the property is still registered as commercial premises the work carries 21 %, however plainly the result will be a home. The reclassification arrives at the end of the process — as does the cédula de habitabilidad, the certificate that a property is fit to live in. Both things a buyer wants early land late.
Non-resident owners
What being foreign does and does not change
Owners buying from abroad worry that their tax position moves the rate. It does not. What makes no difference at all:
- Your nationality, residence and where you pay income tax
- Whether you pay from a Spanish account or from abroad
- Whether the invoice is settled in one payment or five
- Whether you signed in person or by power of attorney
What does make a difference
Who the invoice names. Issued to you as a private individual, for a home over two years old, the reduced rate applies whether you sleep in Barcelona or in Leeds. Issued to a company you own, it goes to 21 %. The rate follows the buyer, not the passport — and the invoice needs your NIE, the number issued to foreigners, or it does not name you.
If you let the flat afterwards
Long-term residential letting is exempt from VAT in Spain, so that landlord does not reclaim the tax and is not a business here. Short-term tourist letting with hotel-type services is a different activity — ask your accountant before signing.
Paperwork
What to ask for before signing, and what to keep
The rate is defended with documents, and in a check both parties are asked for them:
- Your written statement of the property’s use and the building’s age
- A quote separating labour from materials, not one lump sum
- An invoice stating the rate applied and the reason
- Evidence of the building’s age — the catastro record carries the year
Why the breakdown serves you too
Splitting execution from materials lets you test the 40 % before anyone starts, and removes the argument at invoicing. On a 90 m² renovation between €70,200 and €144,000, eleven points is worth an hour of arithmetic.
Communal works and the derrama
Work on common elements ordered by the comunidad can take the 10 % rate too, and on facade or roof rehabilitation, where labour dominates the base, it usually does. It reaches you as a derrama — a levy split among owners by the coefficient in your deed — with the rate already inside the figure.
Frequently asked
Common questions
When the invoice goes to a private individual using the property as a home or to a comunidad, the building is over two years old, and the contractor’s materials stay under 40 % of the taxable base. If one fails, the whole invoice is 21 %.
No. Labour and site costs sit outside the numerator. Only the materials the contractor supplies count, which is why buying finishes yourself lowers the proportion and an expensive kitchen package raises it.
No. Nationality and residence are irrelevant. What matters is who the invoice names: a private individual and a home over two years old qualify, a company reclaiming the tax does not.
Because while the property is still registered as commercial premises, the work is work on commercial premises — whatever it will become. The reclassification arrives at the end, so most of the renovation is invoiced under the old status.
No. The rate follows the facts and both parties answer for it in a check. Ask for a quote splitting labour and materials so the 40 % can be tested before work starts — on a 90 m² job from €70,200 the difference runs to thousands.
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