The difference between paying 10% or 21% VAT can be 500 to 1,500 euros on your renovation
Right, let’s get into it. You’ve spent weeks comparing bathroom renovation quotes, you’ve chosen the tiles, the shower tray, the screen… and suddenly a line appears on the quote that makes you frown: VAT 21%. Wait, wasn’t it 10%? Are they overcharging you? Or does your renovation not meet the requirements?
The confusion around VAT on renovations is one of the questions we receive most. A client from Paterna asked us recently, word for word: “I’ve received two quotes: one with 10% and another with 21%. Who’s right?” The short answer: probably both, depending on how they structured the quote. The long answer is this article.
And it’s no small matter. On a bathroom renovation of 6,000 euros (excluding VAT), the difference between applying 10% and 21% is 660 euros. On a 12,000-euro renovation we’re talking about 1,320 euros. Money that stays in your pocket or goes to the tax office. So it’s worth spending a few minutes understanding this properly.
The basic rule: when the reduced 10% VAT rate applies
The legislation governing this is Law 37/1992 on Value Added Tax, article 91.uno.2.10, and the Spanish Tax Agency has published multiple binding rulings clarifying its application. But let’s translate it into plain English.
For your bathroom renovation to be taxed at 10% VAT (reduced rate) instead of 21% (standard rate), three requirements must be met simultaneously. All three. Two out of three won’t do.
1. Primary residence older than 2 years
The property being renovated must be your primary residence and must be more than two years old since its original construction or previous full renovation. It doesn’t matter when you bought it; what counts is the age of the building.
In practice, this is rarely an issue. The vast majority of flats in Valencia — whether in the centre or in towns like Paterna, Torrent, Mislata or Burjassot — are well over two years old. If your building was built before 2024, you meet this requirement.
2. Materials must not exceed 40% of the total cost
This is the point that causes the most confusion, and rightly so. The law states that materials supplied by the professional carrying out the work cannot exceed 40% of the total taxable base of the transaction. In other words, of the total cost excluding VAT, at least 60% must be labour and the rest materials.
What does this mean in practice? In a standard bathroom renovation, labour (demolition, plumbing, electrical, tiling, fixture installation) typically accounts for 55% to 70% of the budget. So in most cases, the requirement is met without any problem.
However, if you choose high-end materials — large-format rectified porcelain, designer fittings, custom shower screens — the weight of materials can increase and get dangerously close to that 40%. In those cases you need to be careful with the budget.
3. You are a natural person (not a company)
The recipient of the work must be a natural person. If the entity contracting the renovation is a limited company, a community of assets or any legal entity, the VAT is 21% regardless, even if the other two requirements are met.
This matters if you own a flat through a company. Even if it’s effectively your primary residence, if the ownership is held by a limited company, the reduced rate doesn’t apply.
When 21% applies: the most common traps
Now comes the part where people get surprised. Don’t be misled: there are situations that look like they should qualify for 10% but actually attract 21%.
Second home or holiday property
If the bathroom you’re renovating is in a beach flat, a country house you use in summer or a property rented out as holiday accommodation, the VAT is 21%. It doesn’t matter that you’ve owned it for 30 years. If it’s not your primary residence, there’s no reduction.
This affects many people in the Valencian Community, where lots of families have a flat in Gandia, Cullera or Benicassim. The renovation of that bathroom carries 21%.
Materials purchased separately
This is the most common trap and the one that costs people the most money. If you buy tiles yourself from a warehouse and then tell the tiler to install them, two things happen:
- The tiles you buy with 21% VAT (it’s a product sale, not a renovation service)
- The tiler’s labour may qualify for 10%, but only for the work portion
The result? You pay more VAT overall than if you’d contracted everything together through a renovation company that includes materials in the quote. It seems counterintuitive, but that’s how it works.
New build or first delivery
If your property is less than two years old, the work is considered equivalent to a first delivery and is taxed at 21%. This also applies to complete renovations that are classified as new construction for tax purposes.
Renovations contracted by companies
As mentioned above: if the entity signing the contract is a legal person, 21%. This includes companies renovating flats for rental, developers carrying out renovations to resell, or resident communities renovating shared bathrooms (yes, they exist in some buildings with shared facilities).
Three real examples with numbers
Let’s put concrete figures on the table. Because theory is one thing and seeing how it impacts your invoice is another.
Example 1: Standard renovation meeting all requirements
Situation: Maria lives in a 1998 flat in Valencia’s Eixample neighbourhood. She wants a full renovation of her 5 m² bathroom. She contracts Reformarte for the entire project.
| Item | Amount |
|---|---|
| Labour (demolition, plumbing, electrical, tiling, installations) | 4,200 € |
| Materials (tiles, fixtures, taps, shower screen) | 2,300 € |
| Total taxable base | 6,500 € |
| Materials percentage | 35.4% (< 40%) |
| Applicable VAT: 10% | 650 € |
| Total invoice | 7,150 € |
If 21% had been applied, the VAT would have been 1,365 euros and the total 7,865 euros. She saves 715 euros.
Example 2: Renovation with high-end materials
Situation: Javier lives in a 2005 townhouse in Paterna. He wants premium materials: Porcelanosa large-format porcelain, Grohe Rainshower fittings, a designer wall-hung vanity.
| Item | Amount |
|---|---|
| Labour | 4,800 € |
| Premium materials | 5,200 € |
| Total taxable base | 10,000 € |
| Materials percentage | 52% (> 40%) |
| Applicable VAT: 21% | 2,100 € |
| Total invoice | 12,100 € |
Here the materials exceed 40%, so it jumps to 21%. But what if we restructured the budget? If some materials were invoiced separately as a sale while the work with basic materials was invoiced as a renovation service with materials under 40%… Well, that’s exactly what we do at Reformarte when possible. We optimise the tax position within the law so you pay what’s fair. Request your personalised quote and we’ll calculate it.
Example 3: Second home
Situation: Carmen has a flat on the beach in Gandia that she bought in 1995. She wants to renovate the bathroom before summer.
| Item | Amount |
|---|---|
| Labour | 3,000 € |
| Materials | 1,500 € |
| Total taxable base | 4,500 € |
| Materials percentage | 33% (< 40%) |
| But… it’s not her primary residence | |
| Applicable VAT: 21% | 945 € |
| Total invoice | 5,445 € |
Even though materials are well below 40% and the property is old, because it’s not Carmen’s primary residence, the VAT is 21%. No way around it. The difference compared to 10% is an extra 495 euros.
Summary table: conditions for 10% vs 21% VAT
| Condition | 10% VAT | 21% VAT |
|---|---|---|
| Primary residence | Yes | Not met |
| Age > 2 years | Yes | Not met |
| Materials ≤ 40% of total | Yes | Exceeds 40% |
| Contractor is a natural person | Yes | Company or Ltd |
| Second home | Not applicable | Always 21% |
| Materials purchased separately | Only labour at 10% | Materials at 21% |
| New build (< 2 years) | Not applicable | Always 21% |
Golden rule: if any of the three main requirements fails, the VAT goes to 21% on the entire invoice or the corresponding portion.
What happens if your renovation company applies the wrong VAT rate
This is where things get serious. Because VAT isn’t a budget whim: it’s a tax obligation regulated by the Spanish Tax Agency.
If they apply 10% when it should be 21%
The directly responsible party is the renovation company, as they issue the invoice and declare the VAT. But be careful: in a tax inspection, if it can be shown that you as a client knew (or should have known) that the requirements weren’t met, they could claim the difference from you too.
What does this mean in practice? If you contract a renovation for a holiday rental flat and the company invoices at 10%, you both have a problem. The company would have to pay the shortfall in uncollected VAT plus surcharges, and you could face a supplementary assessment.
If they apply 21% when it should be 10%
This is simpler but equally frustrating. You’re simply overpaying. You can ask the company to issue a corrected invoice with the right rate. If the company refuses or has disappeared, you can claim the refund directly from the Tax Agency, though the process is cumbersome and can take months.
The penalties
Under current tax regulations, penalties for incorrect VAT rate application can range from 50% to 150% of the unpaid differential. In a case like Javier’s (VAT difference of 1,100 euros if 10% were incorrectly applied instead of 21%), the penalty could be between 550 and 1,650 euros, on top of having to pay the tax difference with late-payment interest.
After 12 years of experience in renovations, we can tell you that 80% of residential bathroom renovations meet the requirements for the reduced 10% VAT rate. But that remaining 20% exists, and you can’t ignore it.
How Reformarte manages VAT on your renovations
At Reformarte we do something that not every renovation company does: we analyse the tax implications of your renovation before giving you the final quote.
Our process
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We assess your situation: during the first visit, we verify whether it’s a primary residence, its age and who will be the contract holder. A property deed and your ID are all we need.
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We calculate the material/labour split: we structure the quote so you can clearly see what percentage materials represent. If we’re close to the 40% limit, we tell you and we look for alternatives.
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We optimise within the law: if materials exceed 40% because you’ve chosen high-end products, we explore legitimate options. Sometimes, separating the purchase of certain materials (for example, you buying the high-end shower screen directly) can bring the rest of the project within the percentage. Those materials you buy yourself will carry 21%, but the overall saving can be significant.
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We invoice correctly: our invoice clearly states the VAT rate applied, the requirements met and the regulatory reference. This protects you in any future inspection.
You can see how our full process works or calculate your preliminary budget to get an initial estimate with the correct VAT included.
How the total cost compares with and without the reduced VAT rate
For a clear reference, according to data from the INE (National Statistics Institute), average spending on home renovations in Spain has grown by 4.2% year-on-year in 2025. For bathroom renovations specifically in the Valencian Community, the average budget sits between 5,000 and 9,000 euros excluding VAT. Here’s what changes depending on the applicable rate:
| Budget excl. VAT | 10% VAT | Total with 10% | 21% VAT | Total with 21% | Difference |
|---|---|---|---|---|---|
| 4,000 € | 400 € | 4,400 € | 840 € | 4,840 € | 440 € |
| 6,000 € | 600 € | 6,600 € | 1,260 € | 7,260 € | 660 € |
| 8,000 € | 800 € | 8,800 € | 1,680 € | 9,680 € | 880 € |
| 10,000 € | 1,000 € | 11,000 € | 2,100 € | 12,100 € | 1,100 € |
| 14,000 € | 1,400 € | 15,400 € | 2,940 € | 16,940 € | 1,540 € |
As you can see, the difference ranges from 440 to over 1,500 euros. That’s money you could invest in upgrading your renovation finishes instead of handing it to the taxman. Run your numbers with our budget calculator.
Frequently asked questions about VAT on bathroom renovations
Can I apply the 10% rate if the property belongs to my parents but I live in it?
Not directly. The renovation contract must be in the property owner’s name (your parents, in this case). If they are natural persons and the property is their primary residence or yours through a usage agreement, the 10% may apply. But if your parents live elsewhere and the flat isn’t formally anyone’s primary residence, it gets complicated. It’s best to consult a tax adviser or ask us directly.
Does the 10% VAT also apply to just changing a bathtub for a shower?
Yes, as long as all three requirements are met (primary residence > 2 years, materials < 40%, natural person). A bathtub-to-shower conversion is a renovation and improvement work on a dwelling, so it falls under the reduced rate. A full renovation isn’t required.
What if my flat is less than two years old but isn’t new build?
If you bought a second-hand flat that was fully renovated less than two years ago, for tax purposes it may be considered equivalent to new construction. It would depend on whether the previous renovation was taxed as a first delivery. This is a specific case that requires reviewing the actual documentation.
Does the plumber who comes to fix a breakdown also charge 10%?
Ad-hoc repairs (fixing a leak, unblocking a pipe) can also qualify for 10% if the primary residence and age requirements are met. And since materials in a repair are usually minimal (a gasket, a section of pipe), the 40% requirement is almost always met. So yes, your plumber should charge you 10% if the work is in a primary residence older than two years.
Can I claim back if I was already charged 21% when it should have been 10%?
Yes. You have four years from the invoice date to request a correction. Ideally, ask the renovation company first to issue a corrected invoice. If they don’t cooperate, you can submit a request to the Spanish Tax Agency for a refund of overpaid tax. It’s your right and it doesn’t expire until those four years have passed.
Don’t lose sleep over VAT
Look, we understand that all this tax stuff can feel a bit heavy. But the conclusion is quite simple: if you live in your home, the building is over two years old and you contract the full renovation (materials included) through a renovation company, you’ll most likely pay 10%.
Problems arise when people try to save by buying materials themselves, when the renovation is for a second home, or when the company hired doesn’t properly verify the requirements. These are avoidable mistakes.
At Reformarte, VAT management is included in our service. It’s not an extra or a favour: it’s part of doing things right. We give you a fixed-price quote with the correct VAT from day one, and we make sure the invoice meets all legal requirements. If things get complicated (premium materials, shared ownership, etc.), we advise you or refer you to a tax adviser who knows the sector well.
Got questions about which VAT rate applies to your specific renovation? Tell us about your case and we’ll prepare a detailed quote with the correct and guaranteed VAT rate. You can also take a look at our guarantee to see how we’ve got you covered on every aspect of the renovation, not just the tax side.
Your new bathroom is waiting. And with luck, with 10% VAT.
