In short: 21% on renovation, 10% on new build
On our resale-home renovation estimates VAT is, as a rule, 21%. Building a new home for a private client is taxed at 10%.
The law also allows 10% on home renovation, but only when every condition is met at once: the client is a private person using the home themselves, or a community of owners; the building is more than two years old; and the materials the contractor supplies are no more than 40% of the taxable base. In a premium renovation that last condition is almost never met: stone, parquet, sanitaryware and bespoke joinery outweigh the labour. So plan your budget at 21%, and let your gestor confirm whether 10% applies to you.
Who the client is and what the home is for
The relief is aimed at private homes. If the renovation is commissioned by a company, including your own SL that owns the flat, the rate is standard. If the flat is let, the personal-use condition may not be met; that is the first question for your gestor if you are buying to rent out.
Commercial premises get no reduced rate at all. The 250 m² child psychology centre in the Eixample that we renovated in 2026 is an example of work at the standard rate: it is a healthcare activity, not a home. The same goes for offices, shops and clinics.
The 40% rule: how it is calculated
The taxable base is everything the contractor invoices for the works: labour and materials together. If the materials they buy and bring on site are no more than 40% of that amount, the 10% rate applies to the whole invoice. If they exceed it, 21% applies to the whole invoice too, not just the excess.
An example. A €100,000 renovation excluding VAT, with €38,000 of contractor-supplied materials. That is 38%, so IVA at 10%: €10,000. The same renovation with more expensive tiles and sanitaryware, €45,000 of materials. That is 45%, so IVA at 21%: €21,000. An €11,000 difference from one finishes decision. That is why the materials share is worth looking at before you approve the specification.
Why premium renovations often end up at 21%
The more expensive the materials, the sooner they cross the 40% threshold. Natural stone, large-format porcelain, herringbone parquet, designer sanitaryware: in a Luxury-level flat from €3,000/m², materials often make up more than half the cost. For a renovation like that it is more honest to budget at 21% than to hope for 10%.
Bespoke furniture and appliances are often a separate supply at the standard rate. How to count them and whether splitting contracts makes sense is for your gestor to decide in your case. We do not pick a rate to hit a target number: incorrect IVA causes trouble for both contractor and owner at an inspection.
If you buy the materials yourself
Sometimes clients buy the tiles and sanitaryware themselves so that the contractor's materials stay below 40%. Technically that works, but you pay 21% on those materials at the shop, so the saving only applies to labour. Responsibility for quantities, batches, delivery dates and compatibility also shifts to you.
In a premium renovation this often costs more than it seems: one missing box of tiles arriving from another batch, or a mixer that does not fit the concealed body, can stop the crew for days. If you go this way, agree the list, dates and how deliveries are received with your contractor in advance.
What the quote and invoice should show
Our per-m² prices exclude VAT, and the quote shows the IVA rate on its own line. If 10% applies, the quote or contract should make clear on what basis, and the contractor will usually ask you for written confirmation of the conditions. If it is 21%, that should be stated too, not appear as a surprise on the first invoice.
Before signing, check three things: which rate is shown, whether the materials share in the quote is consistent with it, and whether the address and client on the contract match whoever actually lives in the flat. If in doubt, ask your gestor before the contract, not after the first payment.