When renovating an apartment or house on the Costa Brava, one question comes up every time the quote arrives: will VAT be 10% or 21%? The difference is far from trivial: on a €30,000 pre-tax renovation, it amounts to €3,300. Here are the rules that apply in Spain, with concrete examples, so you can understand your quote before signing.
The two VAT rates applicable to works in Spain
In Spain, renovation works are subject by default to the standard VAT rate of 21%. But a reduced rate of 10% exists for home renovation works, subject to precise conditions. It is the contractor who applies the rate — and who must justify it in the event of a tax inspection.
The 3 conditions to qualify for 10%
1. The property is over 2 years old
Construction (or the last renovation treated as new construction) must have been completed at least two years before the works begin. Most apartments and houses on the Costa Brava meet this condition easily.
2. The client is a private individual
The reduced rate applies to works carried out for private individuals, in residential properties — main residence or second home. Commercial premises and works invoiced to companies remain at 21%.
3. Materials supplied stay below 40% of the pre-tax total
This is the least-known condition: to keep the 10% rate, the cost of materials supplied by the contractor must not exceed 40% of the total pre-tax invoice amount. If materials exceed this threshold, everything moves to 21%. That is why a detailed, item-by-item quote is essential: it allows this ratio to be checked.
Concrete examples on the Costa Brava
- Full renovation of an apartment in Palamós (€25,000 pre-tax): labour €16,000, materials €9,000 → materials at 36% of the total → 10% VAT, i.e. €2,500 instead of €5,250.
- High-end kitchen with appliances included (€12,000 pre-tax): materials and equipment €7,500 → 62% of the total → 21% VAT. Tip: buying the appliances separately can sometimes bring the works invoice back below the threshold.
- Façade renovation of a villa in Begur: mostly labour → 10% VAT if the property is over 2 years old and owned by a private individual.
What about a second home if I’m not a tax resident?
Good news: the reduced rate does not depend on your tax residence. A British, French or Belgian owner renovating their second home in Platja d’Aro or Calella de Palafrugell enjoys the same conditions as a Spanish resident. Only the nature of the property, its age and the materials ratio count.
How to check the correct rate is applied
- Insist on a detailed quote separating labour and materials: without it, the 40% threshold cannot be verified.
- Check that the rate is stated on the quote, with the reason (property over 2 years old, residential use).
- Beware of “all-inclusive” quotes at 10% heavy on materials: in the event of an inspection, the adjustment can be passed on to you.
- Keep the invoices: they are also useful in the event of resale (capital gains) or dispute.
In summary
10% or 21%: everything hinges on three criteria — the age of the property, the private-individual status and the share of materials. A transparent, item-by-item quote is your best protection. At Fray Services, every quote states the rate applied and the reason, and we structure the invoice in full compliance with Spanish tax rules.
Do you have a project in Palamós, Begur, Platja d’Aro, Palafrugell or Calonge? Discover our 6-step method and request your free quote: reply within 24 hours, in English.