How to get a superbonus – Subsidy – Grant to renovate your home in Italy?
Superbonus of maximum € 250,000.00
non-Italian citizens also eligible
‘RENOVATION IS A WIN-WIN FOR EVERYONE’
This article is only a general introduction, it is not intended to be a guide.
Detailed professional guidance is always recommended with this matter.
Ecobonus: Improving your energy efficiency by at least 2 classes.
Sismabonus: Improving the seismic risk on the building by at least one class.
Why is the super bonus in Italy?
Superbonus: The new tax credit for Italian property improvements
In May 2020 the Italian Government issued urgent legislation to assist with the recovery of the Italian economy, following the unprecedented shock of the covid-19 pandemic.
Among many other measures, legislation called “Relaunch Decree” (Decreto rilancio) introduced new tax credits for improvements to Italian properties. These tax credits, called “Superbonus” are intended to cover 110% of the costs of energy efficiency and structural seismic improvements of Italian properties, help with the recovery of the economy and in the process, ensuring tax compliance in the local building industry.
“Superbonus” is an unprecedented tax break as it covers 110% of qualifying expenditures incurred between 1st July 2020 and 31st December 2021.
This tax credit can be set against tax liabilities of the relevant property owner, over five years, in five equal annual instalments. It is of interest also to foreign owners of Italian properties, firstly because it is available for Italian properties` qualifying expenses generally (whatever the country of residence of the owner) and secondly, because it is “transferable” to third parties.
“Superbonus” can be traded (Cessione del credito) by entitled property owners, effectively by selling it to third parties, or setting it against their own suppliers` invoices (Sconto in fattura) thus effectively getting the costs of the property improvements paid by the Italian Revenue. It is a substantial improvement on similar, earlier legislation.
The reason why this tax break is up to 110% of qualifying expenses is that a further 10% is added to the total qualifying expenses (100%) actually incurred, to cover the rate of discount likely to be applied if this tax credit (Superbonus) – which is split in 5 equal yearly instalments – is negotiated, sold at a discount, to a bank or other financial institution.
Effectively, 2% discount for each of the 5 years of this tax credit.
Subsequent amendments to this legislation have already extended the transferability facility (both “Cessione del credito” and “Sconto in fattura”), to earlier energy efficiency and structural improvements tax credits which originally could only be set against the property owner`s personal tax liabilities.
This tax legislation is complex and still evolving. It has been amended by subsequent legislation and its interpretation is progressing with Italian Revenue circulars and regulations. There are still some gaps to be filled and no doubt new issues / gaps will arise in future but is a real opportunity for Italian property owners.
“Superbonus” is granted for strictly defined qualifying building works / expenses.
This legislation refers, separately, to “Leading works” (Interventi trainanti) and “linked secondary works” (Interventi trainati).
Except for seismic structural improvements, you need to carry out at least one qualifying “Leading work” resulting in an improvement of 2 energy performance classes of the rating of the building in question in order to qualify.
Then, any linked secondary works may follow and will be included in the overall tax credit calculation.
In very general terms, leading qualifying works are:
*) Thermal insulation (cladding) of more than 25% of the external surface area of a residential building
*) Replacement of heating / air conditioning equipment of residential buildings and boilers (condensation boilers, heating pumps etc.) plus disposal of the old equipment
*) Seismic structural improvements (Sismabonus) that will increase safety / resistance of buildings to earthquakes.
Secondary linked works include a host of other improvements, ranging from the installation of solar panels to double glazing, installation of electric car chargers etc.
Where thermal insulation (No. 1 above) is carried out in a block of flats, the tax credit is up to Euro 40,000 for each of the first 8 flats and Euro 30,000 for any subsequent flat.
Where the replacement of air / water heating equipment is carried out in a block of flats, the tax credit is up to Euro 20,000 for each of the first 8 flats and Euro 15,000 for any subsequent flat.
Seismic structural improvements may qualify for a tax credit of up to Euro 96,000 for each residential unit.
In general, qualifying expenses will attract the 110% “Superbonus” tax credit if:
*) they are incurred between 01.07.2020 and 31.12.2021
*) relate to residential buildings of private individuals / block of flats and not to commercial premises or premises of companies, commercial entities and professionals used for their trade / profession. Each private individual entitlement is limited to two separate and autonomous residential units.
*) the properties affected must not registered at the local land registry under classes: A/1 (high quality homes), A/8 (Luxury villas) or A/9 (Castles and palaces).
Where building improvements do not qualify under the “Superbonus ” legislation, they may still qualify for a more limited and restricted tax credit under the earlier “Ecobonus ” legislation (50% – 65% – 70% – 75% – 80% and 85%), which continues to be applicable.
Italian VAT (Imposta sul Valore Aggiunto – IVA) is usually levied at 22%, however lower rates of IVA (usually 10%) will apply to “Superbonus” works / supplies.
HOW “SUPERBONUS” WORKS?
Once qualifying works have been carried out, fully or in part (it is possible to claim tax credit for works carried out in stages – “Stati di avanzamento”), following the correct procedure legal entitlement to the tax credit arises for the benefit of the Italian property owner, who will have the following options:
1) “Detrazione”: It will be possible to set the “Superbonus” tax credit against current Italian tax liabilities (Italian income tax – IRPEF), in equal instalments over a period of 5 years, or
2) “Sconto in fattura”: It will be possible to transfer the tax credit to the firm / company / trader that carried out the qualifying works / supplied the equipment and materials, up to the amount of their invoice, in full or partial settlement of the same, or
3) “Cessione del credito”: it will be possible to transfer this “Superbonus” tax credit to banks and financial institutions, against a cash payment and possibly subject to a discount. This “Superbonus” tax credit can then be transferred, further on to other, beneficiaries.
Where “Superbonus” tax credit relates to qualifying expenditures, improvements of the common parts of blocks of flats (Condominio), then each co-owner will be entitled a share of the tax credit. Each co-owner can then make a different choice as to the use of the share of “Superbonus” tax credit attributable to him / his individual flat(s). This tax credit is therefore fragmented, in line with the share of ownership of the common parts attributed to each flat / co-owner.
The original beneficiary of “Superbonus” is required to report his / her choice as to the use of his tax credit, to the Italian Revenue by the 16th of March of the following year.
Here the legislation is complex, because the generous intent of the authorities meets the ingenuity and skills of those who may attempt to abuse this tax credit.
“Superbonus” tax credits are conditional on the relevant property / building complying with applicable local planning and building regulations. This is a major obstacle, because of the frequency of planning/ building “irregularities” in Italy. In addition, all the works must be carried out in compliance with all current health and safety regulations that may be applicable.
Professionals appointed to supervise and implement the qualifying works (architects, engineers and surveyors), are required to have professional indemnity insurance with an EU insurance company for an amount proportionate to the value of the qualifying works implemented and supervised and carry a heavy burden of professional responsibility.
The minimum amount of professional indemnity insurance is Euro 500,000. A lawyer (Avvocato) is also required to check all contracts, and make sure they are fully complainant and enforceable in law.
These professionals are required to issue formal certification (Asseverazione) that all the technical standards applicable to the qualifying works / equipment have been complied with and all the expenses incurred, are both proportionate and suitable, for each stage of the works and on completion of the same.
Breaches of professional duties related to the above are sanctioned with criminal and civil penalties. All formal certifications (Asseverazioni) must be lodged, together with a copy of the professional indemnity insurance policy, electronically with ENEA (an Italian Public body). Any breach of regulations could also result in the loss of the “Superbonus” tax break, so it is vital to ensure that all applicable legislation and regulations are fully complied with and documented.
As an additional complexity, where “Superbonus” tax credits are intended to be transferred in settlement of the builders` / suppliers` invoices, or “negotiated” (sold) to third parties, a formal compliance visa (Visto di Conformita`) will also be required.
This is further, formal certification usually issued by an accountant (Commercialista), stating that all tax regulations have been complied with and all the required certifications (Asseverazioni) have been duly issued and lodged with the authorities.
Fortunately for the Italian property owner, the fees of the Italian professionals involved in “Superbonus” operations, for “Asseverazioni”, “Visto di conformita`” etc. are all tax deductible and included in the “Superbonus”.
CONCLUSIONS – THE DEVIL IS IN THE DETAIL.
“Superbonus” is an attractive tax break for all Italian property owners, resident or non-resident, even in the current difficult economic circumstances. Unfortunately, this legislation is very technical and complex.
This new legislation could result in an Italian “tax credits” market, where “Superbonus” tax credits are negotiated and can be bought and sold by parties unrelated to the actual originating property owners. It is not yet clear what the risks involved are likely to be, in future.
However, it is very clear that if you make a mistake in implementing the detailed “Superbonus” regulations you risk losing the tax credit, even if you duly carried out qualifying works and incurred all the relevant costs. In addition, tax penalties and interest charges are also likely to be levied.
“Superbonus” must be handled with professional care, as the legislation is complex and still evolving, to ensure you will get the full benefits of the “transferable” Italian tax rebate.
After all, there is still plenty of time to organise and implement the relevant qualifying works. You will also get a tax credit for most of the professional costs incurred.
According to recent information released by the Italian Revenue (Agenzia delle Entrate) anyone buying Italian residential property within 18 months from the date when restoration / conservative rehabilitation (Restauro e risanamento conservativo) works were carried out, is entitled to Superbonus tax credit.
Again, this tax credit can be turned either into a discount on the purchase price of the property (Sconto in fattura) or tax a credit that may be sold to third parties (Cessione del credito) up to 36% of the cost of the restoration / rehabilitation works, or 25% of the purchase price up to a maximum amount of Euro 48,000. Buy your Italian property at a discount!
The range and extent of Superbonus is substantially increased both by regulations issued by the Italian Revenue (Agenzia delle Entrate) and by the 2021 Budget Law (Legge di Bilancio 2021).
All ordinary tax facilities relating to improvements of buildings (Bonus energetici ordinari) are extended to 31.12.2023.
Superbonus is extended up to 30.06.22. Where the improvements are carried out by “Condomini” and at least 60% of the Superbonus works have been carried out by 30.06.2022, it is now possible to get the Superbonus benefit if works are completed by 31.12.2022.
The 2021 Budget Law extend Superbonus to cover loft insulation, and improvements to group of residential properties (up to 4) registered in the name of the same owner. Sismabonus are extended by up to 50%. Adjustments and modifications to buildings required by disabled owners (Eliminazione delle barriere architettoniche) are also be covered.
Furthermore are some limits regarding the maximum expenses that are deductible:
This poses as a great opportunity for non-Italian residents to renovate and make houses more efficient from an energy and seismic point of view, with the fiscal aid provided by the Italian Government.
Luxury homes excluded:
You cannot use the Eco Bonus for buildings classed as A1 (Luxury), A8 (Prestigious Villa) or A9 (Castles, etc.). Buildings with these Cadastral Categories are not included in this law.
For what kind of properties is the bonus obtainable?
*) Both first and second homes qualify.
*) Property functionally independent and with one or more independent accesses (such as townhouses).
*) Individual residential units.
*) Common parts of residential buildings, for example – condominiums.
If the main characteristics of the property meet the qualifications, the next consideration needs to be done regarding the property documentation itself. A property that has been partially built with no valid planning permission cannot obtain any of the benefits mentioned in this article.
Three possible solutions to spend the bonus:
1) The safest and most convenient way is to pre-pay the invoices yourself and then get re-imbursed for amount paid. This is the most common method for using the bonus.
The advantages of this method are:
*) No additional out-of-pocket costs for all types of applications, for loans, mortgages, etc.
*) Acting quick and finishing the request without too much bureaucratic administration,
*) Submitting the application quickly and having it approved before the bonus fund is empty, after which it is no longer possible to receive the bonus.
*) Quickly start carrying out the work and being able to quickly inhabit the property,
2) Use the fiscal bonus of 110% of the expenses incurred as a deduction.
However, this option is not valid if you are a non-Italian resident and you do not have to pay income taxes in Italy.
3) Alternatively, it is possible to opt for a contribution as an invoice discount applied directly by the suppliers. The client pays the invoice with a discount (up to 100% of the total amount) and the suppliers “buys” the fiscal credit from its client and then uses it as a deduction.
This is very complicated and there are not many suppliers willing to use this system.
What can we do for you?
It is not straightforward to obtain the bonus on your own, due to the high number of documents and licenses requested and mandated, difficulty of passing the many rules, laws and the communication barriers involved.
Therefore, it is necessary to request the support of an expert to avoid penalties.
Our collaborative office in Arezzo can analyse your specific case and provide you with the best tailor-made solution.
What are the costs of the owner?
1) Phase 1: To examine the application: average € 1,000 plus VAT.
2) Phase 2: To initiate and submit the application: average € 4,000 – 5.000 plus VAT.
3) Phase 3: After approval of the bonus subsidy, 15-25% of the total amount awarded plus VAT.
4) Fees for geometra, architect, construction expert, etc: For each project differently
5) Administrative fees and charges of the municipality: For each project differently
For further details see the official pdf guide issued by the Italian Revenue Agency (in Italian) “Agienzia delle Entrate”.
The information in this brochure and publication and email is compiled with the greatest care, nevertheless no rights may be derived from this information and attachments.