VAT on a new-build home in Italy: 4%, 10% or 22%

When a sale is subject to VAT

The Agenzia delle Entrate (the tax agency) states the starting point: a company’s sale of a dwelling is, as a general rule, exempt from VAT. VAT applies in three situations:

• a sale by a construction or restoration company within five years of the completion of the building or of the works;
• a sale by such a company after five years, if the seller chooses to charge VAT, with the choice stated in the deed or in the preliminary contract;
• a sale of dwellings intended as social housing, where the seller chooses VAT, again stated in the deed or preliminary contract.

So “new build” in the tax sense means a sale by a builder inside the five-year window, or an optional VAT sale after it. A company that neither built nor restored the home, and does not fall in the social-housing case, sells under the general exempt regime, and you then pay 9% or 2% registration tax. The VAT status is a fact about the seller and the date, not about how the home looks; ask for it in writing before you sign the preliminary contract.

The three rates

The Agenzia words the 10% case as covering dwellings “even under construction”, classified or classifiable in categories other than A/1, A/8 and A/9, where the prima casa requirements are missing. The 4% case is in its prima casa guide. The conditions to qualify are in prima casa tax benefits.

The base and the fixed taxes

The VAT base is the price of the sale. The Agenzia says registration, mortgage and cadastral taxes are then each fixed at €200, with or without prima casa. The prezzo-valore rule of cadastral taxation is not available, because it applies only to sales that pay proportional registration tax (prezzo-valore).

Calculations with official rates, on a €400,000 new-build price:

• With prima casa: 4% VAT = €16,000, plus €600 of fixed taxes = €16,600.
• Without it, a category A/2 flat: 10% VAT = €40,000, plus €600 = €40,600.

For a villa in category A/8 priced at €800,000: 22% = €176,000, plus €600 = €176,600. These are calculations, not quotes, and they exclude the notary’s fee and other costs.

Making the prima casa declarations early

In a VAT sale the preliminary contract comes first, often long before the deed. Note II-bis of the tariff (comma 2) lets the buyer make the prima casa declarations (residence or work in the municipality, no other home, and so on) in the preliminary contract as well as in the deed. If you intend to claim the 4% rate, ask the notary whether the preliminary contract should already carry those declarations, and read what the contract says about the VAT rate.

Price on the invoice must be the real price

The Agenzia warns that if the price in the deed and invoice differs from the real price, the buyer, even a private one, is jointly liable with the seller for the VAT on the difference and for the related penalty. A private buyer who finds the problem can regularise by paying the extra tax within 60 days of the deed and sending the Agenzia a copy of the payment proof and the corrected invoices.

New build against resale

The two regimes lead to different bills; the comparison is in new build against resale. On a prima casa purchase the VAT rate (4%) is double the registration-tax rate of a resale (2%), and the fixed charges are €600 instead of €100, so at the same price the resale costs less in tax.

What varies locally

The VAT and fixed-tax rates are national. What varies is the annual IMU property tax and, in the land-book areas (Trento, Bolzano, Trieste, Gorizia and part of Udine), the registration system. Payotte has not read a source on whether the VAT-sale taxes differ there, so ask the notary.

Which professional to consult

The notary confirms whether the sale is under VAT and which rate applies. An architect or surveyor can read the planning and cadastral papers of a home that is still being built.