When renovating a home, there are users who have doubts about whether the VAT of 10% or 21% applies. Below we explain which one applies in which case.
In this context, one of the most frequent questions is whether the VAT on furniture, the VAT on kitchen furniture, or the VAT on kitchen renovation always applies at the same tax rate, or if it depends on who supplies and installs the material.
It is also common to wonder if the bathroom renovation invoice can include reduced VAT or if certain works allow deducting the kitchen renovation in the income tax return, something we will see in detail below.
VAT in home renovations
Considering that the Spanish housing stock is old and around 40-50 years old, we cannot deny that renovations are completely in demand.
But, what VAT applies? The truth is that there are certain construction or rehabilitation works that are taxed at the reduced rate of 10%.
Construction or rehabilitation works of buildings intended for housing, whether local, garages, and annexes, are taxed at 10%.
In the case of VAT on kitchen renovation or VAT on furniture, it is important to distinguish between two key concepts: supply of materials and execution of work.
When kitchen furniture, sanitary ware, or decorative elements are purchased as a simple product purchase, the applicable VAT is 21%. However, when these elements are part of a comprehensive renovation with installation included, they can benefit from the reduced rate of 10%, provided that the legal requirements are met.
The installation of kitchen cabinets, bathrooms, and built-in wardrobes in homes is also taxed at 10%.
Another example of taxation at 10% is the works formalized by the homeowners’ association to build garages.
In the case of purchasing materials, it always goes to 21%. This is considered a delivery without installation, whether kitchen furniture, cabinets, doors, windows, etc. But if they are installed, the situation changes, as it would fall under execution of the work.
In cases where the living space of the home is increased, the 10% also applies.
When do I know if the 10% VAT applies?
While it is true that at first it may seem complex to understand the difference. But if as an individual you hire the services of a bricklayer, carpenter, or plumber to do a job at home, you are the holder of the invoice issued by the professional and the responsible party. Therefore, a reduced VAT of 10% applies.
A key point in any bathroom or kitchen renovation invoice is how the cost is broken down between labor and materials, as this directly affects the type of VAT applied.
For example, in renovations where the professional provides both the installation and the materials, the tax authority requires that the cost of materials does not exceed a certain percentage in order to apply the reduced VAT of 10%. This is especially relevant in kitchen and bathroom renovations and furniture replacement.
In these cases, the materials used for the work should not be provided by the worker. If they do, the cost cannot exceed 40% of the taxable base of the renovation. This is because materials are taxed at 21%, while labor is taxed at 10%.
In some cases, it is always possible to negotiate to try to apply the 10% VAT. For example, you can purchase some materials separately to try to stay within the 40-60% range as required and thus apply the reduced VAT.
This is something that is completely current when making renovations and represents a significant price difference, which is always appreciated when making these large investments in the home.
When renovating, make sure to check for subsidies
There are certain aids or subsidies you can consider when renovating your home. Among them, we find subsidies for window replacement, elevator installation, or increasing energy efficiency. Keep in mind that there are regional or national ones, so it is important to take a look beforehand to see which ones you can apply for.
With these renovation aids and the 10% VAT, you can obtain a significant reduction on the total price of the work.
We hope this information has been very useful to you. Do not hesitate to request the 10% VAT as an individual when asking for a quote for your home renovation.
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