The purchase of sanitary ware with a reduced VAT rate of 10% is possible if this expenditure is part of a major renovation. In accordance with Article 31 of Law 457/78, it is possible to benefit from the reduced rate for the purchase of 'finished goods' within the framework of specific measures provided for by law.
The different types of possible works include:
- Ordinary maintenance
- Extraordinary maintenance
- Restoration and renovation
- Renovation of buildings
- Urban renewal
It is important to identify the right type of work as some will qualify for the reduced rate while others will qualify for the standard rate. Therefore, the first thing you need to do is analyse the CILA or other documentation relating to the work. To understand whether or not a reduced rate of VAT is due, you need to look at the documents submitted to the local council to register the work or obtain a licence.
In the case of CILA for permitted constructions (for which no licence is required), the reduced rate of VAT is not due. This is the case if it is only the replacement of sanitary ware, which falls under normal maintenance and is subject to 22% VAT.
In the case of extraordinary maintenance, a distinction must be made between the pure and simple purchase of sanitary ware and the decision to commission a company to carry out the renovation work, which not only supplies the toilet, bidet and washbasin, but also carries out the sanitary installation. While in the first case it is impossible to benefit from the reduced VAT rate, in the second case it is possible to benefit from the reduced rate on part of the invoice (or possibly on the total amount) after a calculation. This is because the law defines the part of the 'essential goods' for which the reduced VAT rate is due in the case of extraordinary maintenance work and clarifies that this is possible 'up to the total value of the service rendered'.
For this purpose, the value of the 'essential goods' (sanitary ware) is calculated and then compared with the labour costs. If the value of the labour costs exceeds the value of the essential goods, a reduced VAT rate of 10% is applied to the total expenditure. However, if the value of the labour costs is lower, the reduced rate applies up to the value of the labour costs and 22% VAT is charged on the excess amount.
In the case of restoration, building renovation and urban renewal, on the other hand, the purchase of sanitary ware is always subject to the reduced VAT rate of 10%. In this case, a photocopy of the building licence required for this type of work is sufficient.