10% subsidized VAT in construction: application rules, responsibilities and practical cases

The conditions for the application of VAT at 10%

The 10% VAT for the construction sector is regulated as part of the table A attached to Presidential Decree 633/1972. For maintenance interventions on real estate units at residential destinationreduced VAT applies both to contract contracts and to those of provision of services relating to the interventions in question.

The reduced VAT is recognized For all residential real estate units regardless of the fact that these are the first home or properties not used as a main residenceas the decisive element is the intended use of the property, not the subjective condition of the owner. The facility is recognized also for luxury propertiesi.e. category A/1, A/8 and A/9.

Reduced rate also for the Interventions on the appurtenancesto which, by law, the same tax rules provided for the property for residential use to which they are bound are applied.

10% also ordinary maintenance

One of the recurring doubts then concerns the application of the rate reduced to the interventions of ordinary maintenanceor those for whom no tax deduction is envisaged. From this point of view, consultancy no. 11 of 9 November 2020, with which the Revenue Agency clarified the point specifying that the VAT rate of 10% (pursuant to art. 7, paragraph 1, letter b, of law 488/1999) must be applied to the interventions carried out on “buildings with a prevalent private inhabitation destination” relating to: ordinary maintenance, extraordinary maintenance; Conservative restoration and rehabilitation; building renovation.

As part of ordinary maintenance, he then clarified the agency, are included:

• consisting interventions in small repairs carried out on the building or relative technological systems;
• ordinary maintenance interventions directed to keep the plants in efficiency existing technological.

The rule in fact, “aims at facilitate recovery interventionsregardless of the contractual methods used, being able to find application both to contract contracts and those of the supply of goods with installation “. There is no difference, however, with reference to the fact that the intervention falls between those who entitle the tax deduction.

22% assets for direct purchases for wake without interventions

Another of the delicate aspects in the application of subsidized VAT is that of treatment of the goods provided in the context of building interventionsthat is, of the so -called “finished goods“, I.e. those who, while incorporating themselves into the property, they maintain their individuality even after installation.

Typical examples are doors, fixtures, sanitary ware, boilers, products for plants. For these thesubsidized rate is allowed only if the sale takes place within the contract. Instead, it is not due when the purchase is made directly by the client.

They do Exception to the rule restoration and renovation interventions, that is The interventions for which the presentation of the SCIA is required. Only in the face of the classification of these interventions is the facility admitted, while it is expressly excluded in the event that it is “simple” extraordinary maintenance intervention (number 127-terdecies) Table A, Part III, Presidential Decree 633/1972).

Significant goods: identification and tax regime

Moreover, with reference to VAT 10%, it should be emphasized that The majority of finished assets are in turn among the “significant goods”for which a Specific tax regime. These are the assets, listed on the Ministerial Decree of 29 December 1999, that is: Lifts, fixtures, boilers, video intercoms, air conditioning and air recycling equipment, sanitary ware and bathroom taps, safety systems.

For these, even when provided in the context of a contract contract, the10% subsidized VAT applies only on the difference between the overall value of the performance and the value of the significant goods themselves. The ordinary rate of 22%is applied on the residual value of the goods.

Let’s do a practical example. If the total cost of an intervention is 10,000 euros, of which 4,000 euros for work performance and 6,000 euros for significant goods (such as health and taps), 10% VAT applies to the difference between the total amount and the cost of significant goods (10,000 – 6,000 = 4,000 euros). On the remaining 2,000 euros, VAT applies to the ordinary measure of 22%.

The detached parts of the significant goods

With the 2018 Budget Law he was then clarified How to correctly identify the value of these assets When components and separate parts are also provided with the intervention. The discriminating criterion is thefunctional autonomy of the parties with respect to the main artifact.

If a detached part has its own functional autonomy with respect to the significant good, its value it must not be included in the value of the good but in that of the performancethus benefiting from 10%subsidized VAT.

The responsibility of companies

The application of subsidized VAT involves specific responsibilities for all subjects involved. The transferor remains the person responsible for the correct application of the taxeven when the client issued a declaration on the intended use of the goods.

In case of tax checksthe administration can verify the effective existence of the conditions for the application of the reduced rate. If it emerges that the requirements were not present, the recovery of the tax takes place against the transferorregardless of the presence of the client’s declaration.

Facsimile of declarations for 10% subsidized VAT

Download two declaration models here:

10%subsidized VAT: FAQ

Let’s see some of the most frequent questions about 10% subsidized VAT in construction:

1. The 10% VAT automatically applies all renovation interventions?
   Yes. The subsidized rate applies to ordinary and extraordinary maintenance interventions, restoration and conservative restoration, and building renovation carried out on residential properties, and related appurtenances.
2. Is 10% VAT for the works on appurtenances even if they are in a condominium of only box?
   Yes. The interventions that concern the only relevance are also facilitated, even in the hypothesis in which it is located in a building that has no prevailing residential destination. For example, the ordinary maintenance carried out on the garage located in a directional center of relevance of its main home is facilitated (circular 71/2000).
3. Is a declaration of the client to apply 10%VAT?
   Yes. In order to benefit from the subsidized rate, the client must certify that it is a property for residential use, or the property of relevance.
4. In this way responsibility in case of errors falls on the client?
   No. The declaration does not automatically transfer the responsibility from the company to the client, but represents a necessary condition for the application of the facility.
5. Do this declaration also need in the event of direct purchase of goods?
   Yes. In any case, the transferor remains the person responsible for the correct application of the tax, even when the client has issued a declaration on the intended use of the goods. In practice, in case of tax checks, the administration can verify the effective existence of the conditions for the application of the reduced rate. If it emerges that the requirements were not present, the recovery of the tax takes place against the transferor, regardless of the presence of the client’s declaration. However, the presence of the declaration is an element of protection for the company in the event of tax checks.
6. How should the company behave in case of tax control?
   The company must be able to demonstrate the existence of the conditions for the application of the facilitated VAT. It is important to retain the declaration of the client, the documentation relating to the works carried out and each element useful to prove the correct intended use of the property and the goods provided.
7. How does VAT apply in subcontracting relationships for renovation interventions?
   The subcontracting company must turn to the main company with the VAT 22%. The main company will then turn to the final client with 10%VAT, when the conditions for the facilitation are resorted.
8. Are roller shutters considered significant assets?
   It depends on functional autonomy. If the shutters are structurally integrated into the fixtures and contribute to their normal functionality, their value flows into that of significant goods. If, on the other hand, they have their own functional autonomy, as in the case of obscurating systems installed separately, their cost must be included in the value of the service.
9. Are the dark curtains to which VAT rate are subject?
   The Revenue Agency provided specific clarifications with response no. 10/2024, specifying that also the alternative solar shields can fall among the facilitated finished goods, provided they maintain functional autonomy with respect to the fixtures. So even these goods can benefit from VAT 10% in the context of a contract or supply and installation contract.
10. Do solar panels are among the significant goods for VAT purposes?
    No, 10% subsidized VAT applies to the entire intervention. The 10% subsidized VAT rate is in fact applicable to the entire system as it is included in the largest category of “production systems and heat-energy distribution networks and electricity from a sun-fetal source” referred to at 127-quinquies in Table A, Part III, Presidential Decree 633/1972; That is to the assets, excluding raw materials and semi-finished products, supplied for the construction of the aforementioned system, as established by the number127-sexies), Table A, Part III.