In order to correctly apply the reverse charge regime in the construction industry, in some cases, it may be useful to decompose the individual contract to overcome certain problems related to the provision of cleaning services, demolition, equipment installation and building completion.
According to the instructions provided by the Revenue Agency with the circular 14/E and 37/E of 2015, in order to correctly apply the reverse charge regime in the building must be checked:
• The eventual splitting of the operation made by the provider
• Proper identification of the individual services involved through 2007 Ateco codes (identified in Circular 14/E 2015)
With reference to the identified Ateco codes we can quote for example:
• The code 43.21.01: Electrical installation in buildings or other construction projects (including maintenance and repair)
• The code 43.21.02: Installation of electronic systems (including maintenance and repair)
It should be noted that the performance under the article 17 par. 6 letter a-ter of DPR 633/72 underlie to the reverse charge regime regardless of the contractual relationship entered into and of the type of business pursued. For these cases you have to check the individual services included in the contract.
As, for example, in an extraordinary maintenance contract of a building you do not have a single Ateco code for "extraordinary maintenance" activity but you have different activities which, together, make up the extraordinary maintenance (e.g. An electrical system maintenance, replacement of fixtures etc ..) you have to decompose the contract in a number of ‘sub-contracts’ in order to define the different types of activities that go to make it up. For each type of these ‘sub-activities’ you have to ascertain whether or not there are the conditions for the reverse charge or the normal regime.
If the decomposition, according to the mentioned circular, becomes difficult for the presence of a single contract, in this case it should apply to all activities only and exclusively the ordinary VAT scheme and therefore also to those activities that theoretically would (if it had been able to define them correctly) had to be under the reverse charge regime.
The complexity of the contract is recognized in the cases of:
1. Unique Agreement contract covering:
a. the construction of a building
b. restoration and conservative renewal
2. services under the reverse charge regime for building fractionation operations or property unit merging under Article 3 par. 1 letter b) of Presidential Decree 380/2001 (interventions that now are included in the extraordinary maintenance)