Italy Clarifies VAT Deduction Rules: Deadlines, Invoices & Refunds

Input VAT recovery in Italy has always come with plenty of fine print: deadlines, invoice wording, which VAT number appears where. That's why we're taking a look at the latest developments and what they mean in practice for businesses operating in Italy — covering how much real room companies now have to claim VAT back, what an invoice needs to say to survive an audit, and what recovery options remain open when the VAT number on the invoice isn't the one you'd expect.

How much time do businesses now have to deduct input VAT?

Since 2017, Italian businesses had to deduct input VAT before the filing deadline of the return for the year in which the right arose — miss that deadline, and the VAT was lost. The Agenzia delle Entrate enforced this strictly: in Ruling Answer No. 115/2025, it confirmed that a business which had received an invoice but recorded it late could not fix the mistake through an amended return (dichiarazione integrativa), even where the VAT was clearly deductible.

That regime has now been relaxed. Article 12 of the Omnibus Decree (Legislative Decree No. 148/2026) extends the deduction deadline to the return for the second year following the one in which the right arose, with invoices recordable within that same extended window. This restores the more flexible regime that existed before 2017 and directly addresses one of the most common headaches in Italian VAT compliance: invoices that arrive late or get lost in year-end paperwork.

What does an invoice need to say to support a deduction?

Having more time to deduct only helps if the invoice itself holds up to scrutiny. The Agenzia delle Entrate has taken the position that invoices with overly generic or abstract descriptions cannot, by themselves, justify the right to deduct.

The underlying logic is simple: a properly worded invoice — one that explains what service was provided and in what context — is presumed valid, and it's then up to the tax authorities to prove otherwise. But once the description becomes so generic that it conveys no real information, that presumption disappears, and the burden shifts to the business to prove, through contracts, engagement letters or correspondence, that the service genuinely took place.

What about non-established businesses trying to recover input VAT?

When it comes to the formal requirements around which VAT number appears on the invoice, Italy's position is more flexible: once the right to deduct and the genuine existence of the underlying goods or services have been established, the fact that an invoice shows the Italian VAT number of a non-established entity does not prevent that business from claiming a refund through the procedure designed for non-established taxpayers.

The Italian Supreme Court confirmed exactly this: VAT identification in a given country is a purely administrative formality that does not create a separate legal entity, so access to the non-established refund procedure cannot be denied merely because the invoice shows the Italian VAT number. The ruling contradicts the Agenzia delle Entrate's own guidance, which requires invoices to be addressed to the foreign VAT number in order to access the EU refund portal. Businesses that followed that guidance now have a precedent in their favour — with an added advantage: this refund procedure typically allows more time than the ordinary deduction deadline, so it can remain a useful route even once the standard deduction window has closed.

Final thoughts and how we can help you

In short: Italy is giving businesses more room to deduct, but demanding more rigour in how each transaction is documented. The difference between recovering VAT and losing it often comes down to the details — a properly worded invoice, a well-managed deadline, the right procedure for your situation.

At Marosa, through our software VATify, we can help with both your ongoing Italian VAT compliance and the management of refund claims for non-established businesses, making sure no deadline or recovery opportunity slips through.