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VAT Due on Property Transfers in Public-Private Partnerships, Says italian Revenue Agency
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Rome, Italy – In a clarification issued on June 10, 2025, the Italian Revenue Agency addressed the Value Added Tax (VAT) implications of property transfers within public-private partnerships. The agency’s Answer n. 151 specifies that the sale of properties, contributed by a municipality to a concessionaire company as part of such a partnership, constitutes a VAT-taxable operation.
Background of the Ruling
The ruling stems from a public-private partnership project initiated by a municipality for urban redevelopment, based on a concession contract.This contract involves the assignment of design, construction, and management activities to a concessionaire company. To offset the concessionaire’s costs, the municipality provides a “public support intervention” by transferring properties, including newly built ones, to the company free of charge.
Did You Know? Italy employs a standard VAT rate of 22%, but also utilizes reduced rates of 10%, 5%, and a super-reduced rate of 4% on certain goods and services [[1]].
VAT Requirements Clarified
The Revenue Agency emphasized that VAT obligations hinge on three conditions: subjective,objective,and territorial. Regarding the subjective aspect, public bodies are generally not considered taxable persons when acting as public authorities, even if they receive fees or contributions. Though, this exemption does not apply when they operate like private economic entities.
To determine weather a public body is acting as a public authority, the Revenue Agency examines the contractual relationship. This involves analyzing the methods of carrying out activities to see if the relationship is governed by contractual terms or unilateral authoritative powers.
In this specific case,the Revenue Agency found that the relationship between the municipality and the concessionaire was contractual,featuring mutual obligations,penalties,and resolution clauses typical of private operators. Thus, the property transfer could not be isolated from the broader contractual context.
Implications for Municipalities and Concessionaires
The Revenue Agency concluded that the property transfer by the municipality, as a contribution under Legislative Decree 36/2023, is a VAT-taxable operation, subject to either a 22% or 10% rate, depending on the specific circumstances. This determination has
