Self-employed builders in Spain

10 % VAT, the reverse charge and why you cannot use modules

In Málaga almost everyone knows a self-employed builder, plumber or painter with months of work lined up. What fewer people know is that renovation has some of the trickiest tax rules a self-employed person (autónomo) can face in Spain: VAT changes depending on who the customer is, some invoices go out without VAT, and the simplified “modules” regime that many take for granted is not available.

None of these rules is hard. But each one, applied wrongly, costs money: VAT charged incorrectly that the Tax Agency claims back with surcharges, tax payments on the wrong form, or a customer who will not pay the difference between 10 % and 21 % when an inspection comes.

These are the five that matter most, checked against the rules in force in October 2026.

1. Builders, plumbers, electricians and painters cannot use the modules scheme

Spain’s objective assessment regime (estimación objetiva, commonly called módulos) taxes certain small businesses on fixed indicators instead of actual profit. It can only be used for the activities listed in the ministerial order published each year. It is a closed list.

The Order HAC/1425/2025, which governs modules for 2026, does not include any activity code from division 5 of the IAE, the construction division: not general building work (501.3), not electrical installation (504.1), not painting (505.6), nor any of the other building trades. They were not in the 2025 order either. And since the simplified VAT regime goes with it, that is not available either.

Why so many people assume otherwise: the general building work code still appears in the list of activities subject to 1 % withholding in the income tax regulation (article 95.6), a withholding designed precisely for those on modules. Seeing the code on that list leads people to think modules are allowed. They are not.

What it means in practice. If you are a self-employed construction worker, you are taxed under direct assessment (usually the simplified version):

You pay income tax on your real profit (income minus expenses), with quarterly payments on form 130, not form 131.
You file VAT under the general regime, for the difference between the VAT you charge and the VAT you pay, on form 303.
Your invoices do not carry the 1 % withholding: it only applies to those on modules.

If you registered under modules with one of these codes, that regime was never available to you. Correct it as soon as possible with an amended form 036 and review any invoices issued with withholding.

2. VAT on renovation work: 10 % or 21 %, and the detail almost nobody mentions

Spain’s standard VAT rate is 21 %. The VAT Act (article 91.One.2.10) allows 10 % on renovation and repair work on homes, but only if all these conditions are met:

Condition	What it means
Who orders the work	A private individual, not acting as a business, who uses the home themselves. Also a community of owners, or the owner of a home let as the tenant’s main residence
Age of the property	Construction or the last major refurbishment of the home finished at least two years before the work starts
Materials	If you supply materials, their cost cannot exceed 40 % of the taxable amount of the work
How it is paid	The customer must pay by card, bank transfer, crossed (named) cheque or deposit into your bank account. If paid in cash, there is no 10 %

The last condition is the one most often ignored. Renovation work paid in cash goes at 21 %, even if it meets everything else. And that is not the only problem with cash: Law 7/2012 (article 7) bans cash payments of 1,000 euros or more in any transaction where one party acts as a business or professional, and as an autónomo, you do.

The materials condition has a catch too. The Tax Agency gives this example: work of 10,000 euros where the tradesperson supplies 5,000 euros of materials goes at 21 %, because materials exceed 40 %. And it clarifies that anything you subcontract to others also counts as materials supplied. In a kitchen or bathroom renovation with units, sanitaryware and appliances included, 40 % is easily exceeded.

Two more Tax Agency clarifications that avoid arguments: maintenance of lifts, boilers or installations is not building work and goes at 21 %; and when you work as a subcontractor for another company, your customer is that company, not the homeowner, so 10 % does not apply to your invoice.

For homeowners: if your builder offers 10 % VAT, pay by card or transfer. Paying cash does not just cost the reduced rate; above 1,000 euros it is not allowed.

Practical tip for tradespeople: state on the invoice that the materials limit is met, keep the bank record of the payment and, if the property is recent or the customer is a business, do not apply 10 % without checking first.

3. When you invoice without VAT: the reverse charge in construction

On some jobs your invoice carries no VAT and the customer declares it. This is the reverse charge (inversión del sujeto pasivo), and construction has its own rule (article 84.One.2.f of the VAT Act). If you have never come across it, our article on setting up a company has the reverse charge explained without jargon.

It applies to building work, with or without materials (and to supplying staff to carry it out) when both conditions are met:

Who your customer is. The contract is directly with the developer of the project, or you are a subcontractor and your customer is the main contractor or another subcontractor.
What the work is. Its purpose is land development or the construction or refurbishment of buildings.

Here is the most common trap: a renovation is not the same as a refurbishment in the legal sense. Under the VAT Act (article 20.One.22.B), work is refurbishment only if more than 50 % of its cost relates to the structure, façades or roofs, or similar or related works, and the total cost exceeds 25 % of the building’s purchase price (if bought in the previous two years) or of its market value (excluding the land). Renovating a flat or a shop almost never meets both conditions.

Situation	Reverse charge?
You are a subcontractor on the construction of a new building for a developer	Yes: invoice without VAT, with the wording “inversión del sujeto pasivo”
You are a subcontractor on a refurbishment that meets the legal test	Yes
You are a subcontractor for a renovation company renovating a flat	Generally no: you invoice with VAT (at 21 %, because your customer is a business)
You work directly for a private homeowner	No: apply 10 % or 21 % as in the previous section

Written notice. The VAT Regulation (article 24 quater) requires whoever hires you to tell you expressly and verifiably that they act as a business and that the work is part of a land development, construction or refurbishment project. Always ask for it in writing and keep it with the contract or quote. If the Tax Agency ever questions the transaction, that document is your defence.

If you get it wrong, it is your problem. If you invoice without VAT on work that should have carried it, the Tax Agency will claim the VAT from you, with interest and possibly a penalty, and recovering it from the customer years later is not always possible.

4. The Register of Accredited Companies: when it affects you

Law 32/2006 on subcontracting in construction requires companies that want to be hired or subcontracted on a building site to be listed in the Register of Accredited Companies (REA), run by the labour authority of the region where they are based.

And the self-employed? The same law (article 3.g) draws a line:

A self-employed worker with no employees who personally carries out their part of the job is, for this law, a “self-employed worker”, not a contracting or subcontracting company.
If you hire employees for the job, you are treated as a contractor or subcontractor, with the obligations of the law, including the REA.

And one limitation worth knowing before taking on a big job: a self-employed worker cannot subcontract the work they have been given, either to companies or to other self-employed workers (article 5.2.e).

5. Invoice properly from the start: 2027 and 2028 already have dates

If you work for businesses, builders or developers, two changes are coming:

Verifactu: the self-employed must invoice with compliant software before 1 July 2027, under the rules in force. The Ministry of Finance has announced it wants to move this to October 2028, but that is not yet approved.
Mandatory B2B e-invoicing: for the self-employed and small businesses, from 6 October 2028.

We cover both in detail in our article on Verifactu and e-invoicing. If you currently invoice from a Word template or Excel, now is a good time to look at alternatives. If you invoice by hand, too.

What we have seen with clients in the sector

We work with self-employed construction workers and with a renovation business in Málaga, and the problems we find are rarely big frauds, but details: a registration under a regime the activity code did not allow, invoices with a withholding that did not apply, 10 % VAT charged to a customer that was a company. And above all, getting paid: this year we helped a self-employed renovation contractor claim an unpaid invoice from a company with a formal demand for payment, until it was paid in full. Having invoices, quotes and communications in order is what made the claim possible.

What we do at Stoa

At Stoa we handle the tax and accounts of self-employed workers and small businesses in the sector, in Málaga and remotely. We check your registration before it is filed, tell you which VAT applies to each type of job, prepare your forms 130 and 303 and help you set up invoicing that will carry you through 2027 and 2028 without surprises. We work in English and Spanish.

Registering as self-employed in Spain or want to check how you invoice? Get in touch.

Frequently asked questions

How long does it take to set up an SL in Málaga?

As a guide, between three and six weeks from applying for the company name until the company is registered at the Commercial Registry. Once the deed is filed with the Registry, the maximum time to register it is fifteen days (article 18.4 of the Spanish Commercial Code), and in practice it usually takes one to three weeks, depending on the Registry’s workload.

How much does it cost to set up a Spanish limited company?

For a simple SL, notary and Commercial Registry fees usually add up to between 500 and 800 euros plus VAT. Incorporation is exempt from capital duty, although form 600 must still be filed. Add small costs such as the company name certificate and the digital certificate, a registered office service if used, and advisory fees.

What is the minimum share capital for an SL in Spain?

One euro, under article 4 of the Spanish Companies Act as amended by Law 18/2022. While capital is below 3,000 euros, the company must set aside at least 20 % of profit as a legal reserve and, if wound up with insufficient assets, shareholders are jointly liable for the difference up to 3,000 euros.

What do you have to do after signing the deed of an SL?

Wait for registration and the permanent NIF, file form 036 to register for tax (it is not automatic), apply for the EU VAT register (ROI) if dealing with the EU, register the director as self-employed if they have control, get the representative digital certificate, keep the mandatory books and set up Verifactu-compliant invoicing.

Does the director of a Spanish SL have to be self-employed?

Yes, if they manage the company or work for it regularly and have effective control, under article 305.2.b of the General Social Security Act. Control is presumed with half of the capital (including relatives they live with, up to the second degree), one third if they work in the company, or one quarter if they also manage it.

How much does a corporate self-employed worker pay in 2026?

They can start with the flat rate for new self-employed workers if they meet the requirements. After that, their minimum contribution base in 2026 is 1,424.40 euros a month, according to Social Security bulletin RED 05/2026. They can contribute provisionally on a lower base of at least 1,000 euros, but the year-end adjustment applies that minimum and claims the difference.

What is the reverse charge in Spanish VAT?

It is a VAT rule under which, in certain transactions, the seller does not charge VAT and the buyer declares it in its own form 303. It applies, among other cases, when a Spanish company buys services from a supplier not established in Spain, when it provides services to businesses in other EU countries, and in certain construction or refurbishment work.