It is mandatory for your company to apply for VAT registration with the Italian tax authorities before starting your activities. Financial penalties may apply if the application for registration is submitted late.

If your company wishes to register for VAT in Italy, it is essential to contact the Italian tax authorities (Agenzia delle Entrate). There is no need to contact the tax authorities in your country of establishment.

In particular, your company will need to submit the following documents:

• The VAT registration form(s) completed in the language of the country
• A copy of the articles of association
• An extract from the trade register
• A certificate of VAT liability
• Power of attorney (if using a fiscal agent)
• Proof of activity on the territory of the country concerned: a contract, an order form, etc.

All documents should be sent at the following address: Agenzia delle Entrate - Centro operativo di Pescara - via Rio Sparto 21 - 65100 Pescara

The Italian tax authorities may require some of these documents to be translated into Italian.

If your file is complete, it generally takes one month to obtain the VAT number.

In principle, non-European companies cannot register for VAT in Italy themselves. They must do so through a VAT representative. This is a local company that will represent you towards the local VAT authorities. He is responsible for meeting all your VAT obligations, including those of which he has no knowledge. For this reason, the VAT representative may require a deposit (e.g. a bank guarantee) from you before accepting the representation assignment.

European companies are not obliged to appoint a VAT representative. However, to facilitate their relations with the local tax authorities, they may appoint a proxyholder (agent) to carry out the tax formalities on their behalf. In this case, it is not necessary to issue a bank guarantee. The company remains solely responsible for paying its VAT debts. This option is also applicable to companies established in a third country (ex. UK) with which reciprocal agreements are in place.

Your company must keep ledgers sufficiently detailed to enable the application of VAT and its control by the Italian tax authorities.

If your company exceeds certain thresholds, it will be obliged to file an Intrastat statement.

The thresholds in Italy are:

• Arrivals: € 200,000
• Shipments: € 50,000

As a supplier of goods or services, your company is normally obliged to issue an invoice with VAT to its customer. This is the general rule. However, there are many derogatory situations which transfer this obligation to pay tax to the customer himself. These situations are known as "reverse charge" situations.

The special reverse charge rules have been introduced in Italy for foreign companies:

For supplies of goods:

The reverse charge is applicable to all domestic supplies of goods made by a business not established in Italy, provided that the customer is VAT established in Italy.

For supplies of services:

The reverse charge is applicable to all domestic supplies of services made by a business not established in Italy, provided that the customer is VAT established in Italy.

The VAT Directive lays down the minimum information that you must include on your invoice. In some cases, countries may add additional compulsory information. Particular attention should be paid to the conversion rates when the currency used on the invoice is not that of the country in which the transaction takes place, and to the specific statements justifying the legal reason why VAT is not charged.

Italy has four different VAT rates :

• Standard rate : 22%
• Intermediary rate : 10%
• Reduced rate: 5 %
• Super reduced rate: 4 %

As a foreign company, it is still possible to send invoices in paper format. However, since 2019, electronic invoicing has become mandatory for Italian companies.

There are several methods to obtain refunds of Italian VAT. The practical formalities for reclaiming foreign VAT will differ depending on whether or not your company is established in Europe and/or is identified for VAT in Italy:

• If your company has a VAT number in Italy, it will have to submit a refund application in the form and within the timeframe required by local regulations. In principle, the VAT credit is automatically transferred to the following month. However, an actual refund can be requested under certain conditions. 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.

• If your company is established in a European country and does not have a VAT number in Italy, it will have to apply for a VAT refund electronically from its country of residence, in the form and within the time limits required by Directive 2008/9.

• If your company is established outside Europe and does not have a VAT number in Italy, it will have to appoint a tax representative to submit its refund application in the form and within the time limits required by the 13th Directive.

VAT incurred on purchases, imports or intra-Community acquisitions of goods and services can be reclaimed by a foreign company provided that these expenses are for taxable activities and provided that the appropriate documentation is available.

No input VAT can be recovered on any of the following expenses:

• Transport expenses;
• Catering and restaurant costs;
• Representation costs.