Article 10, paragraph 1, n. 8) of the Presidential Decree n. 633 of 1972 establishes that the general rule for the rental of residential and instrumental buildings is VAT exemption, without prejudice to the possibility of applying the tax subject to the lessor's option expressed in the rental contract.

Rental contracts for residential properties stipulated starting from 26 June 2012 are subject to the "natural" exemption regime unless - if the conditions required by law exist - the construction or restoration company that rents the property manifests , in the relevant deed, the option for the application of the tax.

While the optional taxation regime envisaged for social housing rentals which was introduced by art. 57 of the legislative decree of 24 January 2012, n. 1, converted, with amendments, by law 24 March 2012, n. 27, has not undergone changes since the aforementioned date.

The registration tax for rental contracts of buildings for residential use (subject to registration in a fixed term if lasting more than 30 days) is different depending on the applicable VAT regime.

In particular:

• if the contract is exempt from VAT, the registration tax is applied on a proportional basis (2 percent);
• if the contract is taxable for VAT (as the lessor has expressed the option to do so), the registration tax is due in a fixed amount (67.00 euros).

Lease contracts for instrumental properties stipulated starting from 26 June 2012 are subject to the "natural" exemption regime unless you opt, as lessor, for the application of the tax in the relevant contract, with effect ( binding) for the entire duration of the contract.

The registration tax for the rental of instrumental properties, in derogation of the principle of VAT/registration alternative - pursuant to the combined provisions of the art. 40 of the consolidated text of the provisions concerning the registration tax, approved with Presidential Decree. 26 April 1986, n. 131 and art. 5, paragraph 1, letter. a-bis), of the Tariff, part one, of the same consolidated law - is applied on a proportional basis (1 percent) regardless of the VAT regime of taxability or exemption to which the rental is subject.

Definitions relevant for the application of taxes

Distinction between residential buildings and instrumental buildings

This distinction is usually based on an objective criterion linked to the cadastral classification of the same, regardless of their actual use. In particular, residential buildings are those classified or classifiable in the cadastral group "A" (excluding the "A/10" category). Real estate units classified or classifiable in cadastral groups "B", "C", "D", E” and in the “A10” category if the destination as an office or private studio results from the administrative authorization provision.
Based on the clarifications provided with the circular dated 1 March 2007 n. 12/E, as regards the tax treatment of the appurtenances of buildings (for example, garages, cellars, etc.), the existence of the appurtenant constraint - making the asset a projection of the main asset - allows the same to be attributed to the appurtenant property nature and, consequently, the tax regime envisaged for the main property. The autonomous fiscal relevance of the operation concerning the appurtenant property remains unchanged, with respect to which it is necessary to verify the objective and subjective prerequisites of the tax treatment actually applicable to the operation.

Construction companies and restoration companies

Pursuant to article 10, first paragraph, numbers 8, 8-bis and 8-ter of the Presidential Decree. n. 633 of 1972, the "construction companies" are identified as the subjects to whom the administrative provision under which the construction or renovation of the building takes place is registered. In particular, for the purposes of the taxability provided for by the law, in addition to companies that directly construct the buildings with their own organization and means, even those that make use of third-party companies for the execution of the works can be considered "construction companies". Please note that, consistently with the interpretative criteria developed by administrative practice, a construction company must also be understood as a company that occasionally carries out the construction of properties. “Restoration companies” are those that purchase a building and carry out or have carried out the building interventions listed in the art. 3, first paragraph, letters c), d) and f), of the Consolidated Building Act, corresponding to the types of interventions referred to in the art. 31, first paragraph, letters c), d) and e), of law 5 August 1978, n. 457.

VAT option communication

As regards the methods of exercising the option, both for residential and instrumental properties, based on the wording of the art. 10, first paragraph, n. 8), of the Presidential Decree n. 633 of 1972, it is necessary for the lessor to express this choice in the rental contract.
The VAT regime chosen at the time of signing the rental contract, i.e. the application of VAT to the rental payments by option or, in the absence of an option, the tax exemption regime is binding for the entire duration of the contract.
If before the expiry of the rental contract there is a succession in the contract, in this case the takeover of a third party as lessor, the latter, as such, can modify the VAT regime to which the rental payments are subject. In this case, the subjective modification of the contract and the change in the VAT regime applied to the fees will be communicated to the Revenue Agency.

References:

• Art. 10, comma 1, n. 8 del D.P.R. 633/1972;
• Revenue Agency Circular 28.06.2013, n. 22/E;
• Revenue Agency Circular 1.03.2007, n. 12/E;
• Revenue Agency Circular 16.11.2006, n. 33/E;
• Revenue Agency Circular 4.08.2006, n. 27/E;