VAT on condominium works in Italy: the applicable rates

VAT on condominium works in Italy does not have a single rate: it changes with the type of work, the destination of the building and the materials used. On the same contract the 10 percent on labour and the 22 percent on part of the goods can coexist. Knowing the rules prevents the administrator from challenging a correct invoice or, conversely, from passing on to owners a higher tax than is due. Here are the applicable rates and the mechanism that most often generates errors, that of significant goods.

The VAT rates on condominium works

Three rates are in play. The 22 percent is the ordinary rate and applies when no relief is available. The 10 percent is the reduced rate provided for ordinary and extraordinary maintenance works on buildings with a prevailing private residential use. The 4 percent is reserved for particular cases, such as certain new-construction works with first-home requirements, and in a condominium it is therefore uncommon. The decisive distinction is almost always between 10 and 22 percent.

Ordinary and extraordinary maintenance

For ordinary and extraordinary maintenance on buildings with a prevailing residential use, the reduced 10 percent VAT applies both to the labour and to the goods supplied by the company carrying out the work. This is the typical case of a facade renovation, painting of the common parts, repair of systems or renewal of the roof. The relief covers the entire contract price, save for the exception of significant goods.

The knot of significant goods

For ordinary and extraordinary maintenance the law identifies certain so-called significant goods, whose value is often high compared to the labour. When these goods are supplied by the same company that carries out the work, the 10 percent VAT does not automatically apply to their whole value. The reduced rate covers the significant good only up to the value of the service net of the good itself; the ordinary 22 percent applies to the excess. This is the mechanism most often miscalculated on invoices.

Which goods are significant

The list of significant goods is set by the Ministry of Finance decree of 29 December 1999 and includes lifts and hoists, external and internal fixtures, boilers, video door entry systems, air conditioning and air recycling equipment, bathroom sanitary ware and taps, security systems. The Revenue Agency, with circular 15/E of 2018, clarified that these terms are to be understood in a generic and not technical sense, so goods with the same function as those listed are also included.

A calculation example

If a maintenance job costs ten thousand euros in total, of which seven thousand for the boiler (a significant good) and three thousand of labour and other materials, the 10 percent VAT covers the significant good only up to three thousand euros, equal to the value of the service net of the good. The remaining four thousand euros of the boiler are taxed at 22 percent. The difference compared to a full 10 percent on the whole amount is not negligible and must be correctly allocated among the owners.

When the 22 percent remains

The ordinary 22 percent rate remains the rule for buildings that do not have a prevailing residential use, for the mere supply of finished goods not accompanied by installation and, as seen, on the excess share of significant goods. Some professional services connected to the works also follow the ordinary rate. Before passing the tax on to owners it is therefore worth checking the nature of the building and the composition of the invoice.

What the invoice must state

When the contract includes significant goods, the invoice must separately state the total consideration for the operation and the value of the significant good, so as to make transparent the calculation of the reduced share and the ordinary one. This is an important requirement for the administrator, because an invoice that applies 10 percent to the whole value of a boiler or fixtures without this distinction is a sign of a possible error. Asking the company for a correct and complete invoice protects the condominium, avoids later adjustments and allows only the tax actually due to be passed on to the owners.

• Check that the building has a prevailing private residential use.
• Distinguish maintenance, taxed at 10 percent, from the mere supply of finished goods.
• Identify any significant goods on the invoice and their 22 percent share.
• Verify that the reduced-share calculation on significant goods is correct.

Managing works VAT with software

Condominium management software records supplier invoices with their respective rates, keeps the reduced share distinct from the ordinary one and allocates the expense among owners on the basis of the correct tables. This helps verify the consistency of maintenance invoices and document precisely the tax charged in the financial statement.

AmministraPro handles works invoices with their different VAT rates and allocates them automatically among owners according to the thousandth tables, keeping the documentation attached to the financial statement. You can see how it works on the features page or compare the plans in the pricing section.