UK and Italy Reach Reciprocity Agreement for VAT Refunds

UK and Italy reach a reciprocity agreement for VAT refund purposes via 13th Directive. UK businesses can now claim the VAT incurred in Italy even though not being VAT-registered.

UK and Italy reach a reciprocity agreement for VAT refund purposes via 13th Directive. Effective from the 7th of February 2024, and with retroactive application from the 1st of January 2021, this agreement marks a pivotal step towards streamlining cross-border transactions and alleviating administrative burdens for businesses in both countries.

The agreement translates into a mutual commitment by the UK and Italy to facilitate VAT refunds for eligible businesses based in those countries. Prior to this arrangement, UK businesses seeking VAT refunds in Italy were required to navigate complex procedures as there was no right to claim the refund due to the lack of reciprocity between Italy and the UK. Now, with the reciprocity agreement in place, UK businesses can submit their VAT refund claims following a foreseen procedure.

The announcement, initially communicated by HMRC via the Chartered Institute of Taxation (CIOT), underscores the retrospective application of the agreement, extending its benefits to claims dating back to the beginning of 2021. However, the practical implementation of the retroactive aspect remains subject to further clarification. The Italian tax offices are waiting for operational instructions concerning the specific protocols and mechanisms for processing VAT refund claims after the statutory deadline. 

Have you incurred on VAT in an EU country and want to learn how to recover it? Have a look at our article EU VAT refund. Recover VAT through the VAT return or separate refund claims?

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