21% vs 10% VAT on solar panels in Spain: when each applies (US sales tax explained)

Spain's tax office issued binding ruling V0277-23 in 2023 clarifying when reduced 10% VAT applies on solar installs. The gap with 21% is hundreds of euros.

10% VAT: when it applies

Applies to 'home renovations' meeting: 1) Labor cost > materials. 2) Primary residence. 3) Property at least 2 years old. 4) Individual buyer (not business). 5) Invoice specifies it's a renovation.

21% VAT: when it applies

Materials (panels, inverter, battery) exceed labor cost: 21%. New construction install: 10%. Non-primary residence (vacation rental): 21%. Business or self-employed: 21%.

Trick: how to secure the 10%

Installer must present itemized invoice where labor (install, engineering, permits) exceeds material cost. This is done with 'supply + install' kits where the installer absorbs panel cost in their service fee.

DIY purchase: only 21%

If you buy panels + inverter online and install yourself, you pay 21% on materials. No installer, no reduced 10%. Hire installer just for connection later: that service goes at 10%.

USA: different landscape

USA has no federal VAT. State sales tax varies 0-9%. 22 states fully or partially exempt solar panels: California, Texas, Florida, Arizona, etc. Plus: 30% federal Investment Tax Credit (ITC) on total cost. Better incentives than Spain's reduced VAT.

Required documentation

To claim 10% VAT: ID copy, primary-residence proof (registration), age certificate (cadastre). Give to installer before invoicing. If audited and missing: tax office claims the difference.

Combine with available rebates.