LOCAL VAT MEASURES FOR FOREIGN COMPANIES IN ITALY
Do special arrangements apply to "call-off-stock" in Italy?
Yes
Special arrangements apply for call-off-stock. Foreign taxpayers are therefore not VAT required to be registered in Italy provided the conditions are met.
Have simplification measures been taken to avoid registration of the foreign company for the goods held on consignment in the country?
No
Call-off stock refers to the situation where at the time of transport of goods to another Member State, the supplier already knows the identity of the person acquiring the goods to whom they will be supplied at a later stage and after arrival of the goods in the Member State of destination. This currently gives rise to a deemed supply (in the Member State of departure of the goods) and a deemed intra-Community acquisition (in the Member State of arrival of the goods), followed by a 'domestic' supply in the Member State of arrival and requires the supplier to be identified for VAT purposes in that Member State.
Simplification measures have been implemented in various Member States avoiding the VAT registration of the supplier in the country of destination.
Triangulation can be applied when the middleman (B) is VAT registered for others supplies in the 3rd country (Member State of destination)?
Triangulation simplification measures can be applied even if the middleman B is VAT registered as a non-established company in Italy [Member State C].
Chain transactions refer to successive supplies of goods which are subject to a single intra-Community transport. The intra-Community movement of the goods should only be ascribed to one of the supplies, and only that supply should benefit from the VAT exemption provided for the intra-Community supplies. The other supplies in the chain should be taxed and may require the VAT identification of the supplier in the Member State of supply.
However, the divergent approach amongst Member States in the application of these exemptions for cross-border transactions has created difficulties and legal uncertainty for businesses.
Optional reverse charge for supply of goods?
Reverse charge is applicable to all supplies of goods carried out by a taxpayer not established in Italy provided the customer is a taxpayer established in Italy.
Optional reverse charge for supply of services
Reverse charge is applicable to all supplies of services carried out by a taxpayer not established in Italy provided the customer is a taxpayer established in Italy.
Optional reverse charge (art. 194 of the VAT Directive)
Member States in which the VAT is due may provide that the person liable for the payment of VAT is the person to whom the goods or services are supplied where the transaction is carried out by a taxable person who is not established in the country in which the VAT is due.
VAT Warehousing implemented in Italy?
Italy has introduced VAT warehousing regime applicable under specific conditions.
Transactions into a VAT warehouse are VAT exempted. The exemption ends when the goods are being taken out of the VAT warehouse. As of 01/04/2017, VAT due upon removal from the VAT warehouse of goods destined to remain in Italy (domestic supply) must effectively be paid directly to the VAT authorities by the VAT warehouse keeper on behalf of the company. Reverse charge is no more applicable (unless if goods originally introduced into the VAT warehouse were part of an intra-EU acquisition). Company will be entitled to recover VAT by issuing a “self-invoice” and by reporting it in its purchases.
VAT Directive
Member States may exempt the importation of goods and the supply of goods which are intended to be placed under warehousing arrangements other than customs warehousing.
Is it possible for a company to pay the import VAT via the periodical VAT return?
Postponed accounting via the VAT return is not possible in Italy. Import VAT needs to be paid to the customs authorities upon importation [immediate payment]. A deferred payment for VAT and customs [similar delay] and additional delay for import VAT are however possible under specific conditions.
VAT DIrective
Member States may provide that VAT on importation does not need to be paid at the time of importation on condition that it is entered as such in the VAT return to be submitted.
VAT OBLIGATIONS IN ITALY
How is the tax period determined in Italy?
Quarterly
The tax period is one quarter [standard tax period]. Your company has to report its VAT position by filing a quarterly VAT return. A listing of clients and providers is also required.
When should periodical VAT return be filed?
Quarterly VAT returns must be filed by electronic means before the 16th ofthe month following the quarter.
VAT Directive
The tax period shall be set by each Member State at one month, two months or three months. Member States may, however, set different tax periods provided those ones do not exceed one year. The VAT return shall be submitted by a deadline to be determined by Member States. That deadline may not be more than two months after the end of each tax period.
Your company is required to submit an annual VAT return by the end of February.
Amending annual VAT returns
In case of corrections in favor of the company, it will be possible to amend the annual VAT return until December 31 of the fifth year following that in which the return is submitted.
VAT Directive
Member State may require taxable persons to submit a return in respect to all transactions carried out in the preceding year. That return shall provide all the information necessary for any adjustments.
Are quarterly filings allowed by the country and what is the filing deadline?
The recapitulative statement [ESL] must be drawn up for each calendar month. Taxpayers can however opt for filing the Statement on a quarterly basis provided the intra-EU transactions do not exceed € 50.000 within the past four quarters. The statement has to be filed before the 25th day of the month following the reporting period [month/quarter] to which it relates.
VAT Directive
The recapitulative statement shall be drawn up for each calendar month. However, Member States, in accordance with the conditions and limits which they may lay down, may allow taxable persons to submit the recapitulative statement on each calendar quarter where the total quarterly amount of intra-EU supplies of goods does not exceed either in respect of the quarter concerned or of any of the previous four quarters the sum of € 50.000 or its equivalent in national currency. The recapitulative statement shall be submitted within a period not exceeding one month.
What is the payment deadline?
In case VAT due results from the annual VAT return, payment should be made before March 16th of the next year.
Are interim payments required?
Periodical VAT calculations [liquidazioni IVA]. Interim payments are due on a monthly or a quarterly basis. The VAT due must be paid before the 16th day of the month following the period [or the 16th day of the second month following the quarter].
VAT Directive
Any taxable person liable for the payment of the VAT must pay the net amount of the VAT when submitting the VAT return. Member States may, however, set a different date for payment of that amount. Member States may require interim payment to be made.
Is any VAT credit automatically carried forward or refunded?
A VAT credit resulting from a periodic VAT settlement or from the annual VAT return is in principle automatically carried forward to the next period, unless a tax refund has been applied for.
Input VAT recovery – Statutory period of limitation
Up to day, input VAT could be recovered at the latest within the annual VAT return at the end of the second year following the year in which the VAT became payable. Under the new regulation, input VAT has to be reported no later than in the annual VAT return of the same year where VAT is charged, i.e. VAT on purchases made in 2017 will need to be included in the 2017 annual return to be submitted by April 30th 2018.
This new regulation is already being challenged and amendments might arise. Updated information will follow if needed.
VAT Directive
Where, for a given tax period, the amount of deductions exceeds the amount of VAT due, the Member States may, in accordance with conditions which they shall determine, either make a refund or carry the excess forward to the following period. However, Member States may refuse to refund or carry forward if the amount of excess is insignificant.
VAT OVERVIEW IN ITALY
What is the local name of the tax?
Imposta sul Valore Aggiunto [IVA]
What is the structure of the VAT number?
Italian VAT numbers have 12 characters [IT + 11 digits]. The first 7 digits identify the taxpayer, the eighth and the ninth ones correspond to the tax agency and the last one constitutes a control number.
VAT Directive
Member States must apply a standard VAT rate [not lower than 15%] which must be the same for the supply of goods and for the supply of services. Member States may apply either one or two reduced rates [not lower than 5%] only to supplies of goods or services as listed in the Annex III of the VAT Directive.
VAT rates
Italy applies a standard VAT rate of 22% and three reduced VAT rates: 4% and 10%.
Dispatches: € 400.000
Arrivals : € 800.000
€ 35,000
The authorities have published a circular letter about terms and methods of transmission of data relating to distance sales of goods that take place through the use of an electronic platforms (circular no. 13 of 01/06/2020);
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