The essentials
- Standard rate: 21%. Reduced rate of 10% under three cumulative conditions (article 91 of Law 37/1992).
- Materials supplied by the company must not exceed 40% of the taxable base; above that, the whole invoice goes to 21%.
- Renovating or repairing a pool stays at 21%: for the Spanish Tax Agency, a pool is not a building intended for housing.
- Until 30 November 2026, a home that is rented out or used for a professional activity is not entitled to the reduced rate.
- From 1 December 2026, if Real Decreto-ley 29/2026 is validated: homes rented out as a main residence included, and the reduced rate made conditional on payment by card, bank transfer, cheque made out to the company or bank deposit.
The three conditions for the reduced rate
Article 91.Uno.2.10º of the Spanish VAT law (Law 37/1992) applies the 10% rate to renovation and repair work on a home. The Spanish Tax Agency (Agencia Estatal de Administración Tributaria, AEAT) summarises the conditions in force as follows:
- the client is a private individual who uses the home for their own personal use, or a community of owners;
- construction or renovation of the home was completed at least two years before the work starts;
- the company does not supply materials, or their cost does not exceed 40% of the taxable base of the transaction.
The 40% materials rule
Materials counted are those that remain part of the home: bricks, stone, lime, sand, plaster and other supplies needed for the work. The company's tools and machinery are not included.
The Tax Agency gives this example: flooring work invoiced at €10,000, including €3,000 of materials, is entirely at 10%. For €10,000 of work including €5,000 of materials, the whole transaction goes to 21%.
The invoice must show the cost of the materials supplied, or state that they do not exceed 40% of the taxable base. A single job cannot be split into a sale of materials at 21% and labour at 10%.
Pools, rentals, insurance claims: special cases
Pool: the Tax Agency considers that a pool is not a building intended for housing. Its renovation or repair is invoiced at 21%, even in a private home.
Rented home: until 30 November 2026, a home that is rented out or used, even partly, for a professional activity is not entitled to the reduced rate.
Insurance claim: the 10% rate applies if the policyholder orders and pays for the work themselves. If the invoice is addressed to the insurer, the rate is 21%.
Second home: the law refers to personal use of the home and does not mention a main residence. Have your situation confirmed by a tax adviser before the work starts.
What changes on 1 December 2026
Real Decreto-ley 29/2026 of 6 October 2026, published in the BOE on 7 October, amends article 91 from 1 December 2026. A decree-law must be validated by the Congress of Deputies within thirty days of its enactment (article 86 of the Constitution). Real Decreto-ley 26/2026, which had already amended this article, was repealed by Congress (resolution published on 2 October 2026): these changes therefore remain to be confirmed.
The text provides for:
- extending the reduced rate to homes rented out as a main residence, whoever the owner is;
- a reduced rate made conditional on paying for the work by credit or debit card, bank transfer, cheque made out to the company or deposit into the company's bank account;
- keeping the two-year and 40% materials conditions.
Three points to check on your quote
Before signing a renovation quote, check:
- the VAT rate applied, and that it states the cost of materials supplied or confirms the 40% limit is respected;
- a 21% rate for pool work;
- from 1 December 2026, if the decree-law is validated, the payment method planned.
Official sources
- Ley 37/1992 of 28 December 1992 on VAT, consolidated text, articles 90 and 91 (BOE)
- Real Decreto-ley 29/2026 of 6 October 2026, article 7 (BOE-A-2026-20823)
- Spanish Tax Agency (AEAT): which rate applies to work on a home
- Spanish Tax Agency (AEAT): frequently asked questions on renovation and repair work
- Spanish Tax Agency (AEAT): 2026 VAT rates, fact sheet dated 26 February 2026
- Spanish Constitution, article 86 (BOE)
General information, written from the official texts cited and verified on the date shown. It does not replace advice from your town hall, your tax adviser or your architect, who alone can rule on your specific case.
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