Italy: 110% Tax Deduction Enacted for Certain Energy and Anti-Seismic Works on Existing Buildings

In Short

The Situation: For years, the Italian tax system has provided for certain tax deductions from income taxes in case of building restoration works. 

The Result: The tax deduction from income taxes has now been increased to 110% in case of energy and anti-seismic works on existing buildings. The tax deduction can also be assigned as tax credit to third-party assignees which, in turn, can further assign it to other assignees. 

Looking Ahead: Business taxpayers, and in particular banks and financial institutions, may want to consider becoming assignees of the tax credits linked to the above described tax deduction and then offset such tax credits against taxes or social security contributions that they owe. 

In order to boost the economy after the COVID-19 emergency, Law Decree No. 34 of May 19, 2020, as converted into law on July 18, 2020 (the "Decree"), has introduced, together with other measures, a deduction from income taxes equal to 110% of certain building-related expenses incurred between July 1, 2020, and December 31, 2021 (the "110% Tax Deduction"), to be used in five yearly installments. 

Eligible Taxpayers

Taxpayers that can benefit from the 110% Tax Deduction are:

  • individuals not carrying out business or professional activity;
  • condominiums;
  • low-income housing institutions;
  • house cooperatives;
  • charities; and 
  • non-professional sport organizations.

Eligible Works

Eligible works listed in the Decree are:

  • those that increase the energy efficiency of an existing building by at least two classes;
  • specific anti-seismic works; and 
  • other works (e.g., installment of solar panels; of charging stations, etc.) at the same time of the other works mentioned above.

Alternatives to the Use of the 110% Tax Deduction

  • Discount on the price for the works. As an alternative to the use of the 110% Tax Deduction, taxpayers can obtain a 100% discount (the "Discount") on the price to be paid to their supplier. In exchange for this, the supplier will receive a tax credit equal to the 110% Tax Deduction. 
  • Assignment of a tax credit equal to the tax deduction. A further alternative is the assignment of a tax credit to a third party, including banks and financial institutions, by an amount equal to the 110% Tax Deduction (the "Assignment").

The Discount and the Assignment are available also in relation to works in progress (stato avanzamento lavori), but some limitations apply in this case.

The tax credit can be further assigned by the assignee or the supplier to a third party, including banks and financial institutions, even more than once.

The assignees or the supplier can offset the tax credit against other taxes or social security contributions that they owe without limitations. However, the utilization of the tax credit must follow the same installments ratio that would have been adopted for the 110% Tax Deduction. The portion of the tax credit not used in a given year cannot be carried forward or applied for refund.


For the purposes of (i) the 110% Tax Deduction; (ii) the Discount; and (iii) the Assignment, a qualified expert must certify that the works met the requirements provided for by the Decree and by implementing rules and that the costs are commensurate.

In case of Discount or Assignment, the taxpayer is also required to obtain an additional certification by a qualified professional (e.g., an accountant) who must assess that the conditions to benefit from the 110% Tax Deduction are met. The option for the Discount or the Assignment must be communicated to the Italian Tax Authorities by the means provided by the law.


The supplier/assignee will be liable vis-à-vis the Italian Tax Authorities only in case of incorrect use of the tax credit. If the works or the taxpayer were not eligible to benefit from the 110% Tax Deduction, the Italian Tax Authorities can claim back the taxes corresponding to the 110% Tax Deduction, interest, and penalties from the taxpayer only, unless the supplier/assignee somehow participated to the violation.

Two Key Takeaways:

  1. Individuals and condominiums will likely consider to make works to improve the energy and anti-seismic efficiency of their buildings in order to benefit from the 110% Tax Deduction. 
  2. Business taxpayers, and in particular, banks, financial institutions, and credit funds, may want to consider to purchase, at discount, the tax credits deriving from the 110% Tax Deduction and use it to offset against other taxes or social security contributions that are otherwise payable by them.
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