VAT registrations and simplications en Italia
When do I need an Italian VAT number?
As a general rule, a foreign business must register for VAT in Italy as soon as a taxable supply is made. The following are some usual examples of taxable transactions:
- Domestic supply of goods not reverse charged: A supply of goods located in Italy to an Italian customer where the supply is not subject to reverse charge requires a VAT registration of the supplier.
- Supply of services not reverse charged: Foreign non-established businesses supplying services on which Italian VAT is due must register for VAT. These services are rather exceptional, as the general B2B rule would apply.
- Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
- Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT.
- Intra-Community supply: Supplying goods another Member State is also a taxable transaction that obliges the supplier to register for VAT.
- Distance sales above the threshold also require a VAT number. See our section on Italian distance sales rules for more information.
A voluntary registration is not possible in Italy. This is, companies cannot register if they have not made a taxable transaction.
There is no registration threshold in Italy for non-established companies. Any company foreign and non-established company performing taxable transactions should register for VAT before the first supply is made.
Italian fiscal representative
Non-EU businesses must appoint an Italian fiscal representative when registering for VAT purposes in Italy. Like other EU countries, the fiscal representative is jointly and severally liable for the tax debts of the company.
In practice, where a fiscal representative is appointed, this representative may require a bank guarantee to cover the risk of tax liabilities imposed by the Italian authorities. This guarantee is different from the bank guarantee required when requesting a VAT refund.
EU businesses can register directly for VAT purposes. This means that the legal representative of the company can sign the registration form without any local Italian involvement.
Contact us if you need more information on Italian registration requirements for EU and non-EU companies.
Italian VAT groups
Currently, there is only an administrative simplification for VAT groups in Italy. Group members can net off their VAT credits and debits into one consolidated annual VAT return. However, intra-group transactions are subject to VAT and each member maintains an individual VAT number.
The Italian government announced plans to introduce VAT group simplifications as part of the 2017 Budget law. According to the announcement, Italy would disregard VAT on intra-group transactions and consolidate all VAT numbers into one single registration. The authorities still need to clarify several details on this VAT group proposal.
Please contact us if you want to receive the latest information about applicable VAT group rules in Italy.
Italian consignment and call-off stock
Under a consignment stock arrangement, the supplier (consignor) places the goods at the disposal of the buyer (consignee), who purchases and "flash sells" the goods as soon as he finds a client.
Where consignment stock happens as part of an international trade agreement, the supplier is often required to register for VAT in the country of the customer. However, some countries allow a simplification where the supplier does not register and the customer reports an intra-Community acquisition when he retrieves the goods from the warehouse. In Italy, this simplification is foreseen under contracts called "contratti estimatori". In these cases, the goods must be stored in the consignee’s premises, who has full control on the sale of these goods.
Italy introduced a consignment stock simplification for intra-Community trade within the EU. The conditions for this simplification to apply are:
- The stock must be kept under control of the consignee either in its own premises or a warehouse designated by him.
- Separate VAT books are required for all movements under the consignment stock simplification.
- A written agreement is required between consignor and consignee
- There is a time limit of one year for the goods to stay in consignment.
- An intra-Community acquisition is reported by the consignee at the time the goods are effectively sold. At that time, a pro-forma invoice must be issued by the consignor making reference to the notice issued by the authorities about EU consignment stock.
- The consignor reports the sale in the ECSL of its home country. The consignee reports an intra-Community acquisition in Italy followed by a domestic sale to the final client.
We refer to consignment stock when the goods are placed in a warehouse in the country of the customer and they are under control of one or more clients, who can retrieve them from the warehouse as and when required. Call-off stock refers to goods placed at the premises of one single client who has full individual control over the sale of these goods.
Bad debt relief in Italy
Bad debt is possible in Italy, however, compared to other EU countries, there are several requirements to be met.
Recovering VAT from the authorities when these amounts have not been collected from your customer is allowed where bankruptcy proceedings have been initiated before the judge on or after 1 January 2016. In these cases, a credit note must be issued and an application must be submitted to recover the VAT amounts. Where the legal bankruptcy proceedings have been initiated before 1 January 2016, this process must be finalized and a decision must be made by the judge before VAT can be recovered in Italy.
The Italian tax authorities have announced plans to change the current bad debt regime by introducing the former rules again. This is, all legal proceedings must be exhausted before VAT deduction is allowed."
Italian import VAT deferral and postponed import VAT
We refer to import VAT deferral when the payment of VAT on importation can be delayed to a later date. Payment is still required, but the due date is deferred. We refer to postponed import VAT accounting when the payment of import VAT is done via the VAT return. At that point, import VAT is also deducted with the corresponding nil effect for the taxpayer. Payment of import VAT is not required under the postponed import VAT accounting.
Deferring the payment of import VAT is possible in Italy, however, there is no simplification under the postponed import VAT accounting.
Normally, companies must pay VAT upon importation. Deferring the import VAT allows for payment of import VAT by the last day of month following the month in which importation took place. For example, where an import is made on 15 January, deferred import VAT can be paid by 28 February. Import VAT will be deducted when the VAT return is submitted.
Italian import VAT deferral must be requested on a separate application to the tax authorities. This simplification also requires a bank guarantee in favour of the authorities."
Italian customs and VAT warehouses
VAT warehouse simplification is available in Italy for EU cleared goods (T2). These goods have already paid customs duties. There is no VAT due on goods sold within a VAT warehouse. However, while goods are in a VAT warehouse, they cannot be sold to a non-taxable person. Once the goods leave the VAT warehouse regime, they will be subject to Italian VAT. This VAT treatment will depend on whether the goods entered the regime as a domestic purchase, in which case VAT must be charged, or they entered the goods as intra-Community acquisitions, in which case the reverse charge applies on the first supply following the VAT warehouse suspension.
The warehouse keeper is jointly and severally liable for the payment of VAT of the first supplier. There is penalty of 30% of the VAT due foreseen on all missed payments related to the VAT warehouse regime.
The following goods are not allowed to be stored in a VAT warehouse:
- Non-EU goods, except if the importer provides Customs authorities with a warranty for the amount of the import VAT. This warranty is not requested from Authorized Economic Operators and other taxpayers authorized by the Italian tax authorities.
- Temporarily imported goods.
- Goods stored temporarily before receiving a Custom destination.
- Goods imported as part of an inward processing relief.
As from 1 April 2017, there are further changes to the list of goods admitted in VAT warehouses. Contact us for more information.
Customs or bonded warehouses are available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due.
No VAT is due on the supply of goods in a Customs warehouse, but an invoice must be issued stating that the amount is not subject to VAT.
Furthermore, in Italy there are VAT-free zones. Here, goods can be transformed, processed or stored without paying VAT or customs duties."