Spain Clarifies VAT Rates for Solar Panel Installations on Residential Properties

• Spain’s General Directorate of Taxes issued a ruling on VAT rates for solar panel installation on residential properties.
• The standard VAT rate in Spain is 21% for solar panel installations.
• A reduced VAT rate of 10% applies to newly constructed or comprehensively renovated properties if certain conditions are met.
• The reduced rate applies if the work is classified as an execution of work, there is a direct contract between the promoter and contractor, and the building is primarily residential.
• For a project to be classified as rehabilitation, it must meet qualitative and quantitative requirements.
• If rehabilitation requirements are not met, the standard 21% VAT rate applies.
• The reduced rate can still apply if the work qualifies as renovation or repair under specific conditions.
• The ruling concluded that solar panel installation may qualify for the 10% VAT rate if the contractor’s material contribution does not exceed 40% of the total work value.

Source: bdo.global

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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