One of the least noticed changes introduced by Royal Decree-Law 29/2026 directly affects bricklayers and renovation professionals who until now applied the reduced 10% VAT rate to work on homes, but were paid in cash. Here is what you need to know:
What is changing?
Paid in cash
21%
The work loses the reduced rate and is taxed at the standard rate
Bank transfer, bank deposit, card or cheque
10%
The reduced rate still applies if the requirements are met
Worked example
For repair work on a home with a taxable base of €3,000:
| Payment method | Taxable base | VAT | Total to pay |
|---|---|---|---|
| Bank transfer or deposit | €3,000 | €300 (10%) | €3,300 |
| Cash | €3,000 | €630 (21%) | €3,630 |
Requirements to apply 10% VAT
In addition, the reduced rate is extended to renovation and repair work on homes intended for long-term residential rental, regardless of who the landlord is. To apply it, the following requirements must be met:
This last requirement is the key new feature and also applies to work on privately used homes.
Who is affected?
Our advice
From 1 December, avoid being paid in cash for this work if you want to keep the 10% VAT rate, and keep the bank receipt for every payment.
If you have any questions about how this change affects you, contact us and we will advise you.
