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Analysis of barter transactions by municipality for the construction of a school building

  • Permutative operations for VAT are characterized by the nature of the consideration, which is not a payment in cash but the transfer of a good or the provision of a service.
  • Each transaction is subject to its own rules and must be examined individually.
  • The Italian Revenue Agency has confirmed this in response to an inquiry.
  • In the specific case examined, a company received a contribution from a municipality for the construction of a school building.
  • This contribution is considered a consideration for the obligations assumed by the company and, for the part financed by the municipality through the transfer of land, it is considered a barter (service provision versus transfer of goods).
  • The transfer of an immovable property is considered a payment in kind subject to VAT separately from the related service, based on the normal value of the transferred goods.
  • In this case, since the barter occurs between two VAT-registered entities, VAT is applied according to the respective rates for each operation.
  • For service provisions, VAT becomes due at the time of payment, unless the company has issued an invoice in advance under Article 6 of the DPR 633/72.


Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.


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