Fiscal Focus: Undetected Tax on Public Land & Technical Services
- The Revenue Agency has issued clarifications regarding the application of tax breaks for construction projects,emphasizing that its review of requests does not constitute an assessment of the subjective...
- 34 of 2020, which allows taxpayers to opt for a discount on their invoice or the transfer of tax credits instead of direct deductions for expenses related to...
- 17,2023,these options for credit transfer and invoice discounts are generally no longer available.
Revenue Agency Clarifies Rules on Construction Tax Breaks
Table of Contents
- Revenue Agency Clarifies Rules on Construction Tax Breaks
- Revenue Agency Clarifies Rules on Construction Tax Breaks: Your Questions Answered
- What is the Revenue Agency clarifying about construction tax breaks?
- What is Article 121 of Decree-Law No. 34/2020 About?
- What kind of building interventions qualify for tax breaks under Article 121?
- What changes did Decree-Law No. 11/2023 introduce?
- What are the exceptions to the restrictions introduced by Decree-Law No. 11/2023?
- How did decree-Law No. 39/2024 impact these tax breaks?
- What does the Revenue Agency mean by “works already carried out”?
- Can you summarize the key dates and requirements?
- What specific examples has the Revenue Agency provided?
The Revenue Agency has issued clarifications regarding the application of tax breaks for construction projects,emphasizing that its review of requests does not constitute an assessment of the subjective or objective requirements for accessing these benefits. The responsibility for verifying these requirements remains with the financial administration.
Background: Article 121 of Decree-Law No. 34/2020
The agency refers to article 121 of Decree-Law No. 34 of 2020, which allows taxpayers to opt for a discount on their invoice or the transfer of tax credits instead of direct deductions for expenses related to specific building interventions. These interventions include:
- Building renovations
- Elimination of architectural barriers
- Recovery or restoration of building facades
- Energy redevelopment
- Reduction of seismic risk
- Installation of photovoltaic solar systems
- Infrastructure for recharging electric vehicles
Limitations Introduced by Decree-Law No. 11/2023
However, article 2 of Decree-Law No. 11 of 2023, paragraph 1, established that, starting Feb. 17,2023,these options for credit transfer and invoice discounts are generally no longer available. Some exceptions to this limitation exist.
Paragraph 2 of the same article introduced exceptions to the prohibition, stating that the restrictions do not apply to expenses related to interventions outlined in Article 119 of Decree-Law No.34 of 2020, provided that certain conditions were met before the effective date of Decree-Law No. 11/2023:
- For interventions not carried out by condominiums, a interaction of the start of works (CILA) must have been presented.
- For interventions carried out by condominiums,a meeting resolution approving the execution of the works and the presentation of the CILA must have occurred.
- For interventions involving demolition and reconstruction, the application for qualification must have been submitted.
Further Restrictions by Decree-law No.39/2024
Decree-law No. 39 of 2024 introduced further restrictions. Article 1,paragraph 5,stipulates that the exceptions outlined in Article 2,paragraphs 2 and 3 of Decree-Law No. 11 of 2023, do not apply to interventions if, as of March 30, 2024 (the date of entry into force of Decree-Law No. 39/2024), no expenses documented by invoice had been incurred for works already carried out.
Therefore, even if the CILA or other qualifying documents were presented before Feb. 17, 2023, the derogation from the blocking of the invoice discount and the transfer of the credit does not apply if no invoiced expenses for “works already made” were incurred by March 30, 2024.
revenue Agency’s Interpretation of “works Already Carried Out”
The Revenue Agency interprets the phrase “works already carried out” as referring to the physical execution of the construction work. The agency clarifies that the derogation applies only if costs related to the execution of subsidized building interventions were incurred as of March 30, 2024.
Specific Cases and Agency Guidance
The agency provided guidance on specific scenarios:
- Payment of tax for the occupation of public land is not considered an expense for “works already carried out” as it does not relate to the material execution of the building interventions. Therefore, the derogation from the blocking of the discount on the invoice or the assignment of the credit does not apply in this case (Response 103/2025).
- the derogation from the blocking of the discount on the invoice and the sale of the credit is applicable only if, as of March 30, 2024, expenses for the material execution of the construction works have been incurred, excluding costs for preliminary technical services (Response 104/2025).
Revenue Agency Clarifies Rules on Construction Tax Breaks: Your Questions Answered
This article provides answers about the Revenue Agency’s clarifications on construction tax breaks.
What is the Revenue Agency clarifying about construction tax breaks?
The Revenue Agency is clarifying the rules regarding tax breaks for construction projects. they emphasize that their review of requests for these benefits doesn’t assess whether the requirements for accessing those benefits are met. That responsibility lies with the financial management.
What is Article 121 of Decree-Law No. 34/2020 About?
Article 121 of Decree-Law No. 34 of 2020 allows taxpayers to choose between a discount on their invoice or the transfer of tax credits instead of direct deductions for specific building interventions.
What kind of building interventions qualify for tax breaks under Article 121?
The interventions covered include:
Building renovations
Elimination of architectural barriers
Recovery or restoration of building facades
Energy redevelopment
Reduction of seismic risk
Installation of photovoltaic solar systems
Infrastructure for recharging electric vehicles
What changes did Decree-Law No. 11/2023 introduce?
decree-Law No. 11 of 2023 generally stopped the options of credit transfer and invoice discounts, starting February 17, 2023. However, some exceptions exist.
What are the exceptions to the restrictions introduced by Decree-Law No. 11/2023?
The restrictions do not apply to expenses related to interventions outlined in Article 119 of Decree-Law No. 34 of 2020, provided certain conditions were met before February 17, 2023:
For interventions not by condominiums, a CILA (Comunicazione Inizio Lavori Asseverata – Declaration of Commencement of Works) must have been presented.
For interventions by condominiums, a meeting resolution approving the works and the presentation of the CILA must have occurred.
For interventions involving demolition and reconstruction,the application for qualification must have been submitted.
How did decree-Law No. 39/2024 impact these tax breaks?
Decree-Law No. 39 of 2024 introduced further restrictions. It states that the exceptions to the restrictions,as outlined in Decree-Law No. 11 of 2023, do not apply if, by March 30, 2024 (the date of entry into force of Decree-Law no.39/2024), no expenses documented by invoice had been incurred for works already carried out.
What does the Revenue Agency mean by “works already carried out”?
The Revenue Agency interprets “works already carried out” as the physical execution of the construction work.The derogation from the blocking of the invoice discount applies only if costs related to the execution of building interventions were incurred by March 30, 2024.
Can you summarize the key dates and requirements?
Here’s a summary table for clarity:
| Legislation | Key Date | Requirement/Condition | Impact on Tax Breaks |
|---|---|---|---|
| Decree-Law No. 11/2023 | February 17, 2023 | General prohibition of credit transfer and invoice discounts (with exceptions) for relevant interventions | Credit transfer and invoice discounts generally no longer available for new projects. |
| Decree-Law No.39/2024 | March 30, 2024 | Incurred invoiced expenses for “works already carried out” | Exceptions to the prohibition in Decree-Law No. 11/2023 do not apply if no invoiced expenses for works already carried out by this date. |
What specific examples has the Revenue Agency provided?
the Revenue Agency provided guidance in two specific scenarios:
Public Land Occupation Tax: The payment of tax for occupying public land isn’t considered an expense for “works already carried out.” Therefore, the discount or credit transfer is blocked (Response 103/2025).
Preliminary Technical Services: The discount is only applicable if expenses for the material execution of the construction works have been incurred by March 30,2024,excluding preliminary technical services (Response 104/2025).