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VAT on home renovation in Spain: when it's 10% and when it's 21%
It's the question that causes the most confusion on any quote: why a renovation sometimes carries 10% VAT and other times the standard 21%. It isn't up to the builder — it comes down to three conditions set by the Spanish tax office. Here they are in plain terms, including the trickiest case: second homes.
The three conditions for the 10% rate
Reduced VAT on a home renovation only applies when all three conditions are met together:
- The property is more than two years old. New-build work or a property under two years old can't use the reduced rate, regardless of anything else.
- The client is a private individual or a community of owners. If the works are contracted by a business or a professional for economic activity, it doesn't apply.
- The cost of materials supplied by the contractor doesn't exceed 40% of the taxable base of the job. This is the part that catches people out most, and the one worth watching on high-end jobs.
Meet all three, and the 10% applies to the whole execution of the works — labour and materials together, not just part of the invoice.
What happens if you go over the 40% materials threshold
This is the nuance that's rarely explained, and the one that moves the most money: if the cost of materials exceeds 40% of the taxable base, you don't just lose the reduced rate on the excess — you lose it on the entire invoice. 21% then applies to the full amount of the job, including the labour that would otherwise have qualified.
This comes up often on high-end kitchen or bathroom jobs, where taps, made-to-measure units or imported porcelain tiling can weigh heavily on the total. That's why, when we break a quote down into line items during the technical visit, we check this proportion before fixing the price — not after invoicing it.
Second homes: the real grey area
This is the most common question among non-resident owners renovating a holiday property on the coast. The regulation refers to a property used as a home, without explicitly distinguishing a main residence from a second home — which leaves real room for interpretation in practice, not a clean yes-or-no answer.
We won't give you a certainty the regulation itself doesn't provide. What we do is check it during the free technical visit, using the real detail of your property and your project, and we recommend confirming it with your own gestoría too if the size of the renovation justifies it. This is orientation so you arrive at that conversation informed, not binding tax advice.
FAQ
The VAT questions we hear most
What VAT rate applies to renovating a home in Spain?
10% if three conditions are met together: the property is more than two years old, the client is a private individual or a community of owners (not a business), and the cost of materials supplied doesn't exceed 40% of the taxable base. If any condition fails, the standard 21% applies.
What happens if the cost of materials goes over 40%?
The reduced rate is lost on the whole invoice, not just on the portion of materials over the limit: 21% applies to the full amount of the works, labour included. This is worth checking upfront on high-end kitchen or bathroom jobs, where fittings and imported materials can weigh heavily on the total.
Does the reduced VAT apply to a second home or holiday property?
This is a genuine grey area in the regulation: the legal wording refers to a property used as a home, without formally distinguishing a main residence from a second home, and interpretation can vary case by case. We don't claim certainty the law itself doesn't provide — we check it during the free technical visit before issuing a quote.
Does the 10% rate apply to communities of owners?
Yes: a community of owners counts as a valid client for the reduced rate, just like a private individual, as long as the other two conditions are met (the building is over two years old and materials stay under 40%).
Who checks which VAT rate applies to my project?
We review it during the free technical visit, using the real breakdown of line items and materials for your specific job, and we recommend confirming it with your own gestoría too if you have doubts — this is orientation, not binding tax advice.
Does the reduced rate cover both labour and materials?
Yes — when all three conditions are met, the 10% applies to the whole execution of the works, labour and materials supplied by the contractor together, not just to part of the invoice.
Orientation only, 2026, not binding and not formal tax advice. The exact rate depends on your specific case: confirm it during the free technical visit and, if you prefer, with your own gestoría.