VAT on painting: when it's 6% or 23%

The difference between an invoice at 6% VAT and another at 23% can represent several hundred euros on a painting job. The problem is that many people only notice the rate applied when the invoice arrives, and by then there is no room to renegotiate or adjust the tax treatment. Works of improvement, remodelling, renovation, restoration, repair or maintenance of properties used for residential purposes benefit from 6% VAT1, but there are conditions that are not always clear before work begins.

When painting qualifies for the reduced 6% rate

For a painting job in a residential property to qualify for 6% VAT, three conditions must be met simultaneously. The property must be more than two years old, counted from the occupation permit or completion of the work (it is not enough that it was painted two years ago); the invoice must be issued to the owner of the property or the tenant (not to a company, unless that company is the owner and uses the property for its own residential purposes); and materials supplied by the contractor must not exceed 20% of the total contract value.

It is this third rule that causes the most confusion. If the budget includes paint, primer, filler and other materials totalling more than 20% of the total, then the materials exceeding that percentage will be invoiced at 23%, whilst labour and the first 20% of materials can remain at 6%. For this reason, in jobs with a high material content, it is common to see invoices split into two parts: one at 6% (service plus materials up to the limit) and another at 23% (excess materials).

In Urban Rehabilitation Areas (URAs), the rules may be different. All improvement, remodelling, renovation, restoration, repair or maintenance work carried out in URAs benefits from the 6% VAT rate, even if materials exceed 20% or if the property is less than two years old. This clarification was published recently and resolved doubts that had existed since 2009. In historic centres of cities such as Lisbon, Porto, Évora or Viseu, many zones are designated as URAs, which can simplify the tax treatment of a painting job.

When painting is charged at 23% VAT

The standard 23% rate applies whenever the work does not meet the requirements for the reduced rate. This happens in new construction (buildings less than two years old), when the invoice is issued to a company that does not use the property for residential purposes, or when materials are supplied independently (the customer buys the paint and then contracts only the application service).

There are also cases where the type of work excludes the reduced rate. Work on leisure facilities (swimming pools, saunas or similar spaces) does not benefit from 6% VAT, even if they are part of a residential property. Moreover, if the work is not classified as maintenance or repair, but as new construction or extension (for example, painting in a newly built room in an extension of the property), the rate will be the standard one.

Another common scenario: the owner decides to buy the paint directly from a building materials store to save on the painter's margin. In this case, the paint invoice will always be at 23%, because there is no integrated contract. The painting service itself may still benefit from 6%, if it meets the requirements, but the materials fall outside the reduced regime.

How to confirm the rate before accepting a quote

Before accepting any painting quote, it is worth confirming which VAT rate will be applied and why. If the painter presents a quote without specifying the rate or without explaining the tax treatment, it is worth asking for clarification. A serious quote should show the net value, the applicable VAT rate (6% or 23%, depending on the case) and the final amount including tax.

When the work involves materials, it is helpful to ask the professional to estimate the weight of materials as a proportion of the total contract. If materials represent more than 20%, you will know that part of the invoice will be at 23% VAT. That information does not change the outcome, but it helps you understand how the final price is broken down and to compare it fairly with other quotes.

The location of the property also matters. If the property is in a URA, this should be stated in the quote, as it guarantees the 6% rate even in conditions that would normally require the standard rate. Simply ask the painter to confirm whether the property is in a designated URA zone (many local councils provide online maps of the delimited areas). If it is, the tax treatment becomes simpler.

What to do when the invoice arrives with a different rate than expected

If the final invoice comes at 23% VAT when 6% was expected, or vice versa, do not accept it without questioning. The VAT rate is not a choice of the contractor: it depends on the conditions of the work and the legal framework. If there is an error, it can be corrected through a corrective invoice.

However, if the contractor correctly applied 23% (for example, because materials exceeded 20%, or because the property is less than two years old), there is no room for challenge. The error, in that case, was not having clarified the conditions before accepting the quote. For this reason, the best protection is always to confirm the applicable rate before starting, not after receiving the invoice.