IVA, how much is the tax?

We have about two months left before moving in. I’m still positive that we’ll not have to move in to construction site, but I am also mentally preparing that not all will be ready. At the moment all the final purchasing is ongoing. So I’m very busy choosing and deciding missing floor materials, kitchen cabinets, equipments and bathroom furniture. Our constructor is also asking final decisions about the structural changes, electricity, lighting, plumping, windows, heating, alarm etc. So at the moment, I’m hardly able to choose what to wear, as all of my brain capacity is fully used by our house project.

When we started this project all the offers were given without VAT, or in spanish IVA. This didn’t make any sense as we are not a business and the prices should always include IVA – which was not the case. The standard IVA is 21 %, which is a big amount when you have to pay it on top of the given offer. For us it was unfair and contrary to other EU countries where consumer prices always need to include VAT – but the local ways of doing business are different obviously, also because sometimes the contractor is also unsure what the correct VAT is. So hoping to save some euros, my husband started to look into this matter. Neither our architect office or contractor were able to help with IVA issues. According to them , the IVA of new buildings was 10 % and for renovation 21 %. What we fortunately found out by seeking tax advice and some online reading was that the IVA law changed in 2012 and subject to some conditions, the tax should be the reduced rate of 10 % for work costs and most building materials too. This reduced tax applies to works and materials performed by a contractor as part of a renovation, not of course to materials you would buy in shop or if you would do these works yourselves. This would prove to be a big saving of course! In reality it meant insisting all of our partners check the tax law, which was changed in 2012 and finally got all to confirm the right VAT for the various works and materials correctly.

Always question the facts and double check everything. In Spain the information is sometimes difficult to find, so no wonder if some law changes happen without people even realising.