22% VAT for maintenance on private residential properties: the case

The European Court of Justice clarifies the case raised by the Portuguese tax authorities. And in Italy?

The European Court of Justice clarifies the interpretation of the VAT Directive 2006/112 / EC and excludes VAT at 10% for maintenance services on private properties.

The case was raised by the Portuguese tax authorities in the context of a dispute over the application of the VAT rate to the repair and maintenance services of lifts (Case C-218/2021) by a company that manufactures lifts and hoists and supplies subsequent assistance.

Following a tax assessment, the Portuguese Tax Agency found that the company incorrectly applied the reduced rate of 10% for both installation and maintenance services.

In the judgment of May 5, 2022, the Court highlighted the difference between the concepts of “restructuring”, “repair” and “maintenance”, thus circumscribing the scope of application of the subsidized VAT. Specifically, the Court specified that :

– the refurbishment service refers to the “occasional” refurbishment of an object;

– the repair service refers to the “occasional” restoration of a damaged object;

– maintenance represents a regular and continuous service.

According to the Court, the characteristic of continuity of maintenance interventions excludes this service from the regulatory provision of reduced VAT (at 10%) granted only for the renovation and repair of private homes.

What does the Italian law provide?

In Italy, the 2000 financial law (L. 488/199, art.7, lett.b, l) allows the application of VAT at 10% for the provision of ordinary and extraordinary maintenance services on buildings mainly for private residential use. . The Court of Justice could therefore force the national legislator to accept the interpretation taken in the Portuguese case.