In a hotel, 10% VAT on works doesn’t depend on how much they cost, it depends on how they’re classified: it applies to restoration, conservative refurbishment and building renovation, while pure ordinary and extraordinary maintenance on a non-residential property stays at 22%. That’s the exact opposite of what happens in a private home, where even maintenance drops to 10%. On a €400,000 works project, twelve percentage points are worth €48,000, the equivalent of four furnished rooms.
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The rule for homes doesn’t apply to hotels
There are two different routes to reach 10% in construction, and this is the point that trips up almost everyone.
The first route is item 127-quaterdecies of Table A, Part III of Presidential Decree (DPR) 633/72. It covers services under contract works for recovery interventions, meaning restoration, conservative refurbishment and building renovation as defined by Article 3 of DPR 380/2001. This route doesn’t look at what the building is used for: it applies the same way to a detached house, a warehouse and a sixty-room hotel.
The second route is the 10% maintenance rule, introduced by Law 488/1999 and later made permanent. That one, though, is written for buildings that are predominantly privately residential, and a hotel registered under cadastral category D/2 doesn’t fall within it. A bed and breakfast set up in a flat registered under category A/2 or A/3 does, because the property remains residential: it’s one of the rare cases where a B&B comes out ahead of a hotel.
This is where the most common misunderstanding comes from. The hotelier redoes twelve bathrooms, the surveyor files a CILA (a simplified building notice) for extraordinary maintenance, the contractor invoices at 22%, and the phone call starts: “but I renovated.” They renovated in the everyday sense of the word, not in the sense of Article 3.
| Intervention | Residential property | Hotel and other non-residential property |
|---|---|---|
| Ordinary maintenance | 10% | 22% |
| Extraordinary maintenance | 10%, capped by the significant-goods limit | 22% |
| Restoration and conservative refurbishment | 10% | 10% |
| Building renovation | 10% | 10% |
| Finished goods supplied for the recovery intervention | 10% | 10% |
| Raw materials and semi-finished goods (sand, cement, tiles, raw panels) | 22% | 22% |
| Professional services (design, site supervision, safety) | 22% | 22% |
| Supply of movable furniture | 22% | 22% |
These figures reflect the framework in force in 2026 and should be taken as indicative: classifying a specific intervention is a technical assessment, not a box to tick.
The significant-goods rule matters less than people think
The ministerial decree of 29 December 1999 lists seven categories of significant goods: lifts and hoists, internal and external fixtures, boilers, video entry systems, air conditioning and air recycling equipment, sanitary ware and taps, security systems. These are the goods on which the 10% rate only applies up to the value of the service net of the good itself, with the excess reverting to 22%.
That rule lives inside the maintenance route, so within residential property. In a hotel, where maintenance is already at 22% and recovery work is at the full 10%, the significant-goods calculation normally doesn’t come into play. If the intervention is a building renovation, the new lift, the fixtures and the taps all follow the 10% of the contract works without the labour-value cap. Hotel quotes still turn up with significant goods broken out at the bottom: whoever does that is applying the wrong model, and almost always to the client’s disadvantage.
The building permit decides the rate, not the quote
The sentence worth memorising is this: the rate is decided in the meeting with the surveyor before the application is filed, not in front of the invoice.
When the designer draws up the report and chooses between a CILA, a SCIA (a more substantial building notice) or a full building permit, they are also writing down how much VAT will be paid. An intervention that moves the bathrooms, opens and closes partition walls, redoes the waste stacks and changes the floor layout is a building renovation in every respect, and needs classifying as such. If it’s classified as extraordinary maintenance because the CILA is faster and the review process cheaper, you’ve saved a few weeks and lost tens of thousands of euros.
The reverse also happens and is more treacherous: inflating the classification to claim 10% on works that aren’t a renovation. In the event of an inspection, the tax office looks at the building permit, the technical report, the drawings comparing the existing and proposed states, and the bill of quantities. If the drawings show that only the tiles were replaced, the classification doesn’t hold up.
The invoice needs little but needs it precise: the nature of the intervention, the building permit reference with number and date, and a citation of the rule applied. An invoice saying “building works as agreed” documents nothing, and doesn’t help during an inspection. The same goes for progress statements: every SAL (stato avanzamento lavori, a works progress statement) needs to reference the same contract and the same permit.
Within the overall cost of a hotel renovation, the items where the rate really matters are building works and systems, which alone account for 60-70% of the budget, not the furniture.
Where the line falls between 10 and 22
Finished goods are those that keep their own identity even when incorporated into the building: lifts, fixtures, sanitary ware, boilers, fixed light fittings. Within a recovery intervention, these get 10% even when the hotelier buys them directly rather than through the contractor, provided the supplier receives a written declaration stating the goods are intended for the subsidised intervention. This is a real option when a property buys its own sanitary ware or light fittings to control quality.
Raw materials and semi-finished goods stay at 22% regardless: sand, cement, mortars, and tiles too, which many assume are a finished good but aren’t.
Movable furniture is a category of its own again. Beds, bedside tables, freestanding wardrobes, armchairs, desks, everything you can take away without a screwdriver, counts as a supply of goods and is taxed at 22%, always, even when delivered on the same day the contractor closes the site. There’s no legitimate way to route furniture through the building contract to claim the reduced rate, and anyone proposing that is offering you a problem, not a discount.
The grey area is fixed furnishings: panelling anchored to the wall, cabinetry built into recesses, reception desks fixed to the floor, headboards that form a single piece with the wall covering. When these are designed and fitted as part of the works by the contractor, they follow the contract’s rate; when they arrive as a separate supply from another party, they’re movable goods at 22%. This distinction needs building in beforehand, in the furniture and works specification, keeping the line items separate in the furniture bill of quantities and in the building works bill.
There’s a substantive point that often gets forgotten. For a hotel with fully deductible VAT, the 22% on furniture isn’t a cost, it’s a cash advance that comes back through the periodic settlements. The real issue concerns whoever has a low deductibility pro rata or runs the property outside the business VAT regime, typically certain bed and breakfasts: there, the twelve points stay attached to the price forever. Before setting up the deal, it’s worth knowing which of the two situations applies, because it also changes how you think about the per-room furnishing budget and about furniture depreciation on the balance sheet, which follows its own rules and has nothing to do with the VAT rate.
The mistakes that lose the relief
The first is the silent invoice, the one with no reference to the intervention or the permit. It costs nothing to write it properly, and it costs a great deal not to.
The second is splitting supply and fitting across two separate contracts for convenience. The subsidised contract is a single agreement whose object is carrying out the intervention; if one firm does the fitting and another invoices the goods as a plain sale, the goods portion slides to 22% and nobody recovers it afterwards.
The third is the untracked variation. The site always changes, but if the nature of the intervention changes too and the building permit isn’t updated, you end up with renovation-level works and a maintenance-level permit, or the reverse. The variation needs filing while it’s happening, not after testing is complete.
The fourth concerns advance payments. VAT crystallises at the moment of payment, so an advance invoiced before the permit application is filed, when it still isn’t clear how the intervention will be classified, risks being issued at the wrong rate and then needing a correction note. It’s better not to pay significant advances until the building permit has been filed.
The fifth is procedural. The rate is applied by whoever issues the invoice, and in the event of a dispute the assessment lands on them, but supply contracts almost always provide in writing for recourse against the client. Signing a contract that promises 10% without attaching the classification of the intervention means buying a risk that surfaces years later.
One last practical piece of advice worth more than many lines of regulation: ask the surveyor, before signing anything, for a two-page note stating how the intervention will be classified, under what permit and at what rate for each spending category. If the site runs with the property open, that note also helps organise invoicing by lot and avoid mixing up items when building crews and furniture fitting with the hotel operating alternate. The rest of the taxes weighing on operations, from IMU on business property to the waste tax, follow their own logic and are mapped out in the overview of taxes an accommodation property pays.
Everything above is an explanatory reconstruction of the 2026 framework, useful for asking the right questions. The decision on any specific site needs making together with your accountant and the surveyor who signs the application, because it depends on the comparison drawings, the contract and the property’s cadastral category, three things that can’t be assessed from a distance.
Frequently asked questions
Can a hotel apply 10% VAT to extraordinary maintenance works?
No. The 10% rate for ordinary and extraordinary maintenance is provided for buildings that are predominantly privately residential, and a hotel registered under cadastral category D/2 doesn’t fall into that category. On a hotel, extraordinary maintenance is taxed at 22%, while 10% applies when the intervention is classified as restoration, conservative refurbishment or building renovation.
Does the furniture in a hotel room get 10% VAT?
No, movable furniture is always taxed at 22%, even when delivered on the same site that benefits from the reduced rate on the works. The exception is fixed furnishings incorporated into the building, such as anchored panelling or built-in cabinetry, when these are designed and fitted by the contractor as part of the recovery intervention. To avoid disputes, the two items need keeping separate in the specification and the bill of quantities.
Does the significant-goods rule apply to hotels?
Normally no, because that rule operates within subsidised maintenance on residential properties. In a building renovation on a hotel, lifts, fixtures, sanitary ware and taps all follow the 10% of the contract works without the cap linked to labour value. A hotel quote that breaks out significant goods separately is applying a model that doesn’t fit.
What does the contractor need to write on the invoice for the reduced VAT rate?
The invoice needs to state the nature of the intervention, the building permit reference with its filing number and date, and the regulatory reference for the rate applied. Progress statements need to reference the same contract and the same permit. A generic wording like “building works as agreed” documents nothing, and doesn’t support the relief in the event of an inspection.
