The legislation on building renovations has undergone a series of important innovations over the last few years. Among the most relevant aspects of the discipline, we want to reflect today on the application of value added tax (VAT) for building renovations.
VAT concession for works of ordinary and extraordinary maintenance
In order to speak fully and profitably of the VAT legislation in the field of building renovation, we must first distinguish the macrocomparto maintenance work (ordinary and extraordinary) that relating to the restoration work, conservative restoration and renovation.
With regard to services related to maintenance, ordinary and extraordinary, made on residential property, it is in fact expected a lighter regime represented by the application of VAT to 10% instead of 21%.
In this regard, we note that the sale of the goods will remain subject to VAT facilitated only and only if the relative supply will be placed within the scope of the contract.
And this is the most sensitive topic of this part of legislation: if the contractor provides goods value "significant", the reduced rate of 10% will apply to those goods only up to the value of the benefit, which will be considered net of the value of the assets. As highlighted in a recent clarification of the Revenue, the limit value shall be identified by subtracting from the total amount of the service (represented by the entire amount that the customer shall provide the contractor), only the value of the significant assets.
At this point, it becomes important to understand what are the significant assets, uniquely identified by the legislature by the Decree of 29 December 1999 that he was able to refer to: lifts and hoists; internal and external fixtures, boilers, video intercom, air-conditioning equipment and air recycling, sanitary ware, taps and bathrooms, and safety facilities.
In all significant assets, the reduced rate will apply only up to the amount of the difference between the total value of the benefit and the value of these significant assets.
If the discussion above may seem complex, an aid to better highlight what has just been enshrined there is still offered by the Inland Revenue, which has a typical "case study" in his pamphlet of February 2012 related to building renovations and the resulting benefits tax.
Assume that we have to face a total cost of the 10 thousand euro, of which EUR 4,000 for work performance, and 6000 Euros for the cost of goods that we were able to identify among those "significant". Significant assets on the reduced VAT of 10% will apply only on the 4000 Euros, ie the difference between the total cost of the intervention and that of significant assets. It follows that the residual value, amounting to 2,000 Euros, the value added tax will apply to the extent of 21% ordinary.
The regulations governing the application of VAT to 10% facilitated encounters, however, some important cases of exclusion. Among the main, remember that it is not possible to apply the bonus VAT to such materials or goods provided by a person different from the one that performs the work, materials or goods purchased directly from the customer, the professional services (even if made within scope of measures aimed at building restoration); performance of services rendered in the execution of the subcontracting company performing the work.
Tax relief for restoration, rehabilitation and preservation building renovation
Having established the above, to the works of ordinary and extraordinary maintenance, we point out that for all other building renewal is always expected, with no expiration date, the application of VAT to 10%.
In large fence that covers these activities include the provision of services associated with contracts to supply or work related to the implementation of the restoration, rehabilitation and renovation conservative, and the purchase of goods (with the exception of raw materials and semi-finished ), provided for the creation of such restoration, rehabilitation and preservation building renovation.
Translated via software
Italian version of ReteIngegneri.it