A solar installation on an existing home in Spain can be invoiced at 10% VAT. Not because it is solar, but because Spanish law treats it as renovation work on the home, and that comes with specific requirements. If they are met, 10% is legal. If not, the rate is 21%. Here is what they are, how they are checked and what we do in every quote.
In short: 10% applies when the home is more than two years old, you use it as a private home (or it belongs to a homeowners’ association) and the cost of the materials supplied by the installer does not exceed 40% of the price before VAT. If any of the three conditions fails, the whole job goes at 21%.
1. The general rule and the exception
The standard Spanish VAT (IVA) rate is 21%. The VAT Act (Law 37/1992, article 91) provides a reduced 10% rate for some works on homes, and the Spanish Tax Agency (AEAT) sums it up like this: works on homes are taxed at 21% unless they fit one of those cases.
Two of them can fit a self-consumption system: renovation or repair of a home, which covers almost everyone who already lives in their house, and construction of a new home contracted by its developer.
2. Existing home: renovation work
The Directorate General of Taxes (DGT) has confirmed that installing solar panels on an existing home is renovation work (ruling V2068-21), governed by article 91.Uno.2.10.º of the Act. It goes at 10% when all three requirements are met at once:
- Who contracts it. An individual who uses the home privately, or a homeowners’ association. If a company contracts it, or the home is rented out or used for a business, it does not apply.
- Age. The home was finished, or refurbished, at least two years before the work starts.
- Materials. The cost of the materials supplied by the installer does not exceed 40% of the taxable base, that is, of the price before VAT.
The Tax Agency’s own example: a €10,000 job with €3,000 of materials can go at 10%. The same job with €5,000 of materials goes at 21%.
How the 40% is counted
- Cost counts, not the selling price. What matters is what the installer pays its suppliers for the materials, not what it charges you for them (ruling V0984-15).
- Every material that stays in the job counts: panels, inverter, battery, mounting structure, cabling and protections. Materials supplied by a subcontractor count too.
- Over the limit means all of it. If materials exceed 40%, the whole job goes at 21%. Invoicing labour at 10% and materials at 21%, or splitting the job into two invoices, does not work.
- The invoice says so. An invoice at 10% under this rule states that the materials supplied do not exceed 40% of the base.
In practice, a system with panels and an inverter often qualifies: panel prices have fallen a lot, and labour, legalisation and the other services weigh in the total. A battery, on the other hand, is almost all material: with a battery it is harder to stay under 40%. That is why there is no general answer: it is calculated for each job.
3. Home under construction: the self-builder
If you are building your home and contract the installation directly as part of that work, a different rule applies: construction of a home contracted with its developer (article 91.Uno.3.1.º). There is no materials limit here, but you need the building permit for the home.
This is not the case of someone who already lives in their house and wants panels on the roof: that is renovation, and the previous section applies.
4. Building refurbishment
There is a third route, refurbishment, but it is meant for large projects: more than 50% of the project cost must go to structure, façades, roofs or similar works, and the total must exceed 25% of the value of the building excluding the land. A solar installation on its own is not a refurbishment.
5. What does not change the VAT, and what is compatible
- The energy certificate, grants and tax deductions do not change the VAT rate. A better energy rating, or a grant, does not turn the job into a 10% job. VAT depends only on the requirements of article 91.
- 10% VAT is compatible with the income-tax deductions: the energy-efficiency one (40% or 60%), the 2026 self-consumption one (10% or 20%) and the Valencian regional deduction. You need a correct invoice and payment through the bank, never in cash. Because those deductions are capped, paying less VAT rarely changes what you deduct.
6. When it goes at 21%
| Your case | VAT |
|---|---|
| Private home more than two years old, materials up to 40% of the base | 10% |
| Homeowners’ association, same age and materials requirements | 10% |
| Home under construction, contracted by the developer, with a building permit | 10% |
| Materials above 40% of the base | 21% |
| Company, shop, warehouse or office | 21% |
| Rented home or home used for a business | 21% |
| Home finished less than two years ago | 21% |
In addition, at A Todo Sol we currently invoice solar pergolas at 21%, because the structure is almost all material, and installations paid through renting, because the invoice is issued to the renting company and not to you.
7. How we do it at A Todo Sol
- We calculate the materials of your job before quoting, using the real purchase cost of each piece of equipment, the structure, the cabling and the protections. We keep a safety margin below 40%: if the result is too close, the quote goes at 21%.
- If 10% applies, your price goes down. We keep the same price before VAT and apply 10%: the difference is yours. We do not raise the job to make up for it.
- We put it in writing. The quote and the invoice state which legal case the 10% relies on. In the quote you confirm the requirements that depend on you: that the home is for private use and is more than two years old.
- If it does not apply, it goes at 21%. We do not split the job into two invoices or inflate the labour to make the numbers work.
8. What to ask if you are offered 10%
- Ask in writing which legal case it relies on: renovation of a home, or a home under construction with a building permit.
- If it is renovation, ask how they calculated the materials against the price before VAT.
- Be wary of 10% “because it is solar”, “because of the energy certificate” or “because of the grant”: none of those is a legal reason.
- If a company contracts it, or it is for a shop or a warehouse, the renovation rate does not apply.
- Also compare the price before VAT: that shows how much of the difference between quotes is the installation and how much is the tax.
9. If 10% is applied wrongly
The installer is the one who declares and pays the VAT. If it applied 10% without meeting the requirements, the Tax Agency assesses the installer: the difference up to 21%, with interest and, where appropriate, a penalty. But the installer can then claim that difference from you, and an invoice at the wrong rate makes it harder to support the deductions in your income-tax return.
That is why we ask you to confirm in writing the requirements that depend on you: if that statement were not true, the law would make you liable for the difference. With the requirements clear and the materials calculated, 10% is simply the VAT that applies.
Sources: articles 91.Uno.2.10.º and 91.Uno.3.1.º of Spanish VAT Law 37/1992; Spanish Tax Agency, “What rate applies to works on homes?”; Directorate General of Taxes rulings V2068-21 and V0984-15. Article updated on 14 October 2026. It does not replace tax advice on your specific case.