Following the publication of Manouvrina decree , the statute of limitations for VAT deduction in Italy has been reduced. Going forward, VAT deduction will only by allowed by 30 of April of the following year. This date is the due date for the Annual VAT return, hence a purchase invoice will only be deductible until the last day in which the Annual VAT return for the period in which the invoice was incurred can be submitted.
Before these changes, the statute of limitations covered a much longer period, as VAT could be deducted until the 31 December of the fourth year following the year in which VAT was incurred.
The European Commission has granted approval to Italy to continue the use of anti VAT fraud split payments regime with state organizations. The Commission also allowed Italy to extend the measures to state-owned companies, businesses in the FTSE MIB Index and companies directly controlled by local public bodies.
According to the European Commission, it is possible to derogate Articles from 206 and 226 of the EU VAT Directive regarding transactions with public authorities in industries with a significant evidence of VAT fraud.
Under the VAT split payment mechanism, VAT is not collected...Read more
Last year the Italian authorities announced plans to introduce quarterly VAT returns and quarterly invoice listings. Before last year, an annual VAT return, annual Spesometro and monthly or quarterly VAT payments were due. In 2017, Intrastat returns were also meant to be abolished.
Given the importance of these changes and the little time to adapt to the new rules, the Italian tax authorities announced a revised timeline and several simplifications in order to allow businesses to meet the new VAT return requirements.
Here is a summary of transitional measures agreed in Italy
The Italian government announced important changes to the VAT compliance obligations of all registered businesses applicable as from 1 January 2017. These changes included the abolition of Intrastat returns, as they would be replaced by quarterly invoice listings with detailed information about the activities of each taxpayer.
This month the Intrastat authorities published a communication requesting the January Intrastat return to be submitted by all taxpayers that were normally required to file these returns. We expect Intrastat returns in the following months to remain due in Italy, although...Read more
The Italian government announced that the standard VAT rate will increase from 22 to 25 in 1 January 2018. An additional increase of 0.9 will be made on 1 January 2019, hence bringing the standard VAT rate in Italy to 25.9 in 2018, the second highest in the European Union only after the Hungarian 27 stadard rate. In addition, the reduced VAT rate is also expected to increase from 10 to 13 as from 1 January 2018.
Last year the Italian government cancelled the planned increase of VAT rates from 22 to 24 as from 1 January 2017. We suggest waiting until the recently announced VAT rate changes are confirmed later in the year...Read more
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