10% or 21%: the 660-euro difference that depends on four requirements
The first question you ask when you see a renovation quote is whether it includes VAT. The second, which should matter just as much, is which VAT rate applies. The difference between 10% and 21% on a 6,000 € renovation (tax base) is 660 €. That’s not pocket change — it’s enough to pay for the entire shower screen.
Spanish legislation allows the reduced rate of 10% on home renovations as long as certain requirements are met. The problem is that those requirements aren’t intuitive, the case law is extensive, and many renovation companies apply them incorrectly — sometimes in your favor (inspection risk), sometimes against you (you overpay).
Here’s the technical guide. No unnecessary legal jargon, with case studies and the decision tree we use internally at Bathscape.
The decision tree: 10% or 21% VAT
According to Law 37/1992 on VAT (Article 91.Uno.2.10) and binding consultations from the Spanish Tax Agency, for a bathroom renovation to qualify for 10% VAT, all of the following requirements must be met simultaneously:
Requirement 1: The recipient is a natural person (not a company or a self-employed person using the property as business premises).
Requirement 2: The property is more than 2 years old (from the date of construction completion or the last full rehabilitation).
Requirement 3: The cost of materials supplied by the company does not exceed 40% of the total project cost (including labor).
Requirement 4: It is the recipient’s dwelling — primary or secondary residence, but a dwelling. Not commercial premises, not an office, not a warehouse.
If any of the four fails: 21% VAT. No exceptions, no creative interpretations.
Let’s go case by case.
Case 1: Standard renovation in primary residence (80% of cases)
Situation: Maria lives in an apartment in Benimaclet built in 1988. She wants to renovate the bathroom. Quote: 6,800 € (VAT included).
Analysis:
- Natural person: Yes.
- Property > 2 years: Yes (38 years).
- Materials < 40%: In a standard bathroom renovation, materials supplied by the company (tiles, fixtures, faucets, vanity) typically represent 30-38% of the total. Yes, it qualifies.
- Recipient’s dwelling: Yes, it’s her primary residence.
Result: 10% VAT.
Calculation:
- Tax base: 6,182 €
- VAT 10%: 618 €
- Total: 6,800 €
If 21% had been applied:
- Tax base: 6,182 €
- VAT 21%: 1,298 €
- Total: 7,480 €
Difference: 680 €. Those are the real numbers for a typical renovation. Six hundred eighty euros that Maria legitimately saves by meeting all four requirements.
Case 2: Renovation with high-end materials
Situation: Pablo and Laura want a premium renovation in their Ruzafa apartment. Custom resin shower tray, Italian large-format porcelain, solid wood vanity, designer concealed faucets. Quote: 14,500 € (VAT included).
Analysis:
- Natural person: Yes.
- Property > 2 years: Yes.
- Materials < 40%: This is where it gets complicated. The breakdown:
- Materials supplied by the company: 6,800 € (47% of total before VAT)
- Labor + other: 6,380 €
The material cost exceeds 40%. Requirement 3 is not met.
Result: 21% VAT.
Calculation:
- Tax base: 11,983 €
- VAT 21%: 2,517 €
- Total: 14,500 €
If 10% could be applied:
- VAT 10%: 1,198 €
- Total: 13,181 €
Difference: 1,319 €. That stings. But it’s the law.
Legal solution: In some cases, the billing can be restructured. If Pablo and Laura purchase the high-end materials directly (porcelain, faucets) and the company invoices only labor + minor materials, the percentage of company-supplied materials can drop below 40%. This is perfectly legal as long as the client genuinely makes the purchase. At Bathscape, we can guide you on this option — but note, it requires the client to manage part of the procurement.
Case 3: Second home at the beach
Situation: Andres has an apartment in Cullera (Valencia) that he uses in summer. He wants to renovate the bathroom.
Analysis:
- Natural person: Yes.
- Property > 2 years: Yes (built in 2005).
- Materials < 40%: Yes (standard renovation).
- Recipient’s dwelling: Yes. The law says “dwelling,” not “primary residence.” A second home is a dwelling.
Result: 10% VAT.
Many people — and many companies — mistakenly believe that second homes carry 21% VAT. That’s incorrect, as long as the other three requirements are met. The Tax Agency has confirmed this in multiple binding consultations (V0585-18, among others).
Case 4: Commercial premises (hair salon, clinic, restaurant)
Situation: Carmen has a dental clinic in central Valencia and wants to renovate the patient bathroom.
Analysis:
- Natural person: Carmen is a natural person, but she’s acting as a business owner (self-employed or LLC).
- Property > 2 years: Not applicable — it’s not a dwelling.
- Materials < 40%: Irrelevant.
- Recipient’s dwelling: No. It’s commercial premises.
Result: 21% VAT. Without nuance.
And a technical note: if Carmen is self-employed or has an LLC, that 21% VAT is deductible in her business activity. So the real impact is tax-neutral. She pays 21% to the renovation company but deducts it on her tax return. The one who can’t deduct anything is the private individual — which is why the reduced 10% rate exists.
Case 5: Rental property (individual landlord)
Situation: Roberto has a rental apartment in Patraix and wants to renovate the bathroom between tenants.
Analysis:
- Natural person: Yes (Roberto is a natural person, the apartment isn’t owned by a company).
- Property > 2 years: Yes.
- Materials < 40%: Yes (standard renovation).
- Recipient’s dwelling: Here’s the debate. The apartment is a dwelling, but it’s not Roberto’s dwelling (he lives elsewhere). However, the General Directorate of Taxes has clarified that “recipient’s dwelling” includes dwellings owned by the recipient that are used as homes, even if rented out.
Result: 10% VAT (consolidated interpretation, though verification with a tax advisor is recommended).
This is relevant for landlords renovating for rental. Our article on rental renovation ROI analyzes the profitability of this investment — and the 10% VAT rate significantly improves the payback.
The 40% requirement: how it’s calculated exactly
This is the requirement that generates the most confusion. The rule states that “the cost of materials supplied by the party performing the work cannot exceed 40% of the total cost of the work.”
What counts as “materials supplied by the company”:
- Tiles, porcelain, stoneware
- Fixtures (toilet, basin, bidet)
- Shower tray
- Shower screen
- Faucets
- Vanity unit
- Plumbing materials (pipes, fittings)
- Electrical materials (cable, switches)
What does NOT count (or counts as service):
- Direct labor
- Skip/container hire
- Transport
- Waste management
- Small consumable materials (silicone, tape, screws)
In a standard bathroom renovation with a typical balance, materials run at 32-38% of the total. Very close to the limit. In premium renovations with expensive materials, the threshold is easily exceeded.
Our advice: Always request a breakdown of materials vs labor+services in the quote. If you’re in the 35-40% range, consider purchasing a high-cost item directly (e.g., faucets or vanity) to bring the percentage down. It’s legal, but requires coordination.
What Bathscape does with VAT in its quotes
Total transparency. Every quote issued by our configurator shows:
- The tax base broken down by line item
- The material percentage of the total
- The applicable VAT rate based on the client’s requirements
- The VAT calculation and final total
If during configuration we detect that the material percentage is approaching 40%, we flag it and offer alternatives: adjust materials, have the client purchase certain components directly, or simply inform that the VAT will be 21%.
No tricks. We don’t “massage” the invoice to force 10%. That kind of practice — which does exist in the industry — creates problems in case of a tax inspection and puts the client at risk. According to the BOE, penalties for improper application of the reduced rate can be 50-150% of the differential.
Our how it works process explains the entire flow, including the tax component.
Summary table: VAT impact on typical renovations
To see the real impact across different budgets:
| Tax base | 10% VAT | Total with 10% | 21% VAT | Total with 21% | Difference |
|---|---|---|---|---|---|
| 3,000 € | 300 € | 3,300 € | 630 € | 3,630 € | 330 € |
| 5,000 € | 500 € | 5,500 € | 1,050 € | 6,050 € | 550 € |
| 7,000 € | 700 € | 7,700 € | 1,470 € | 8,470 € | 770 € |
| 10,000 € | 1,000 € | 11,000 € | 2,100 € | 12,100 € | 1,100 € |
| 15,000 € | 1,500 € | 16,500 € | 3,150 € | 18,150 € | 1,650 € |
| 20,000 € | 2,000 € | 22,000 € | 4,200 € | 24,200 € | 2,200 € |
On a 10,000 € base renovation, the difference is 1,100 €. For reference, that’s the average masonry labor cost for the entire renovation. Not a minor detail.
What if the wrong VAT rate is applied?
If a company charges you 21% when 10% should apply, you’re overpaying. You can claim it back. If they charge 10% when 21% should apply, the risk is yours: in an inspection, the Tax Agency can reclaim the difference from the client as the taxable person of the transaction.
Always verify. Cross-check the requirements. If in doubt, a consultation with the Tax Agency is free and binding.
In Valencia, the tax office on Calle Guillem de Castro handles in-person consultations by appointment — something not everyone knows, but it’s a free and useful resource. You can also make online consultations through the Tax Agency electronic office.
Frequently asked questions
What VAT rate applies to a bathroom renovation in a primary residence?
If the property is over 2 years old, the recipient is a natural person, and materials supplied by the company don’t exceed 40% of the total cost, the reduced 10% VAT rate applies. Otherwise, the general 21% rate.
Does a second home pay 10% or 21% VAT?
10%, as long as the other requirements are met (property > 2 years, natural person, materials < 40%). The General Directorate of Taxes has confirmed that “recipient’s dwelling” includes second residences.
How can I make sure the correct VAT rate is applied?
Request a tax base breakdown with materials and labor separated. Verify that the percentage of company-supplied materials doesn’t exceed 40%. If you’re near the limit, consider purchasing a high-cost item directly (faucets, vanity). When in doubt, consult the Tax Agency for free.
What happens if 10% is applied when it shouldn’t be?
In case of inspection, the Tax Agency can reclaim the difference between 10% and 21% plus late-payment interest. The penalty can range from 50% to 150% of the differential. That’s why it’s essential to verify that all requirements are met before accepting a quote with reduced VAT.
Want to know which VAT rate applies to your renovation? Configure your bathroom in our configurator — the system automatically calculates the applicable VAT rate based on your data and shows you the final price with itemized VAT. No ambiguity.