Value added tax for reconstruction or renovation in Spain. So what kind of VAT is paid in these cases, 10 or is it still 21%? Is there a legislative amendment for a reduced tariff? What type of real estate does it apply to and what is needed to apply for a reduced tariff? Arcostec specialists answer these frequently asked questions. are answered in this publication.
LEGISLATION
Yes, there is such an amendment to the law and you can “save” . Officially, this is regulated by Royal Decree 20/2012 of July 13th (El Real Decreto-ley 20/2012 de 13 de julio), adopted in 2012 and entered into force on September 1st of the same year.
TYPE OF REAL ESTATE
This amendment to the law applies only to residential buildings or houses for personal use or for HOAs, we separately emphasize that NOT to commercial activities with the appropriate municipal license, such as "Albergue", "Ostali", "Hotels" and others.
TYPE OF WORK
The type of reconstruction or repair work, in order to take advantage of the opportunity to reduce VAT to 10%, must be as follows:
- Strengthening or enlarging the supporting frame
- Significant restoration or elimination of damage to load-bearing elements
- Facade restoration
- Roof, roofing or terrace repair
- Large interior work (there is a minimum budget for work
DOES NOT APPLY to: minor internal redevelopment work, replacement of utilities, aesthetic repairs in general, landscaping, swimming pools or sports facilities
REQUIREMENTS FOR REGISTRATION
In order to apply for reduced VAT, i.e. 10% instead of 21%, the following requirements must be met:
- Provide an architectural design for "Major construction work" or "Obra Mayor". At the same time, the specified design cost of work to strengthen vital load-bearing elements must exceed 50% of the total estimate
- Have sufficient evidence to confirm the true nature of the work being designed, such as technical reports, examinations or official instructions from professional boards on "accidents" real estate
- The official total cost of construction work must exceed by at least 25% the cost of the property (if we are talking about a purchase two years ago) or the cadastral value of the property in its current condition before repairs and subtracting the cost of the site.
ADDITIONAL USEFUL INFORMATION
Read the law on the official tax website in Spain: follow the link
Tax for reconstruction or repair in Spain.
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