Italy: Main news regarding VAT compliance

Two years following the implementation of mandatory e-invoicing via SDI, a further step forward to fully digitalised compliance procedures and pre-drafted VAT-relevant ledgers and returns is being taken.

Pre-drafted VAT ledgers and returns

Starting with transactions performed as of 1 January 2021 onwards, the Italian Tax Authorities will make available – on an experimental basis – pre-drafted VAT ledgers, quarterly VAT communications and yearly VAT returns. Said procedure will involve VAT-taxable persons being established in Italy only. To prepare these documents, the Italian Tax Authorities will use the data retrieved from electronic invoices, electronic communication of cash register data, VAT communication of cross-border transactions and any other useful information available in the Tax Authorities database. At the end of each quarter, each taxpayer could then check the pre-drafted VAT ledgers and confirm, complete or possibly modify them, so that the Italian Tax Authorities could have a preliminary VAT computation and then prepare the pre-drafted quarterly VAT communication and, at year-end, also prepare the pre-drafted yearly VAT return. Such an automatism, however, may not have a specific benefit for taxpayers, given that there still is a fair amount of information that will not be available to the Italian Tax Authorities in due time, so that (ultimately) the risk is that (in most cases) the pre-drafted documents will be incomplete.

Digitalised VAT communication procedure

To accelerate the process to a fully digitalised procedure, it has already been announced that, as of 1 January 2022, the VAT communication of cross-border transactions (which, at present, shall be filed on a quarterly basis) should be filed using the same XML format used for e-invoices via SDI and the filing should occur in shorter terms. Specifically, (1) as regards outgoing transactions, the VAT communication of cross-border transactions shall be filed by the same deadline for issuing the related sale invoice; whilst (2) as regards incoming transactions, the VAT communication of cross-border transactions shall be filed by the 15th of the month following the receipt of the purchase invoice or the date when the transaction was made. As a matter of fact, this would imply an increase in tax fulfilments for taxpayers being established in Italy.

Increased fight against VAT fraud

The cross-use of data being made available to the Italian Tax Authorities from different sources and databases would enable a further fight against VAT fraud. As announced in the Finance Bill 2021, a specific task force will be employed to cross-check data and information, in order (1) to detect taxpayers who benefit from the special rules reserved to so-called “habitual exporters” without meeting the specific requirements; (2) to prevent the issuance of so-called “letters of intent” in which the underlying requirements are missing; (3) to block “letters of intent” which had been issued without meeting the specific requirements and also (3) to inhibit the issuance of e-invoices mentioning an invalid “letter of intent”. For the sake of completeness, under “habitual exporter rules”, if specific requirements are met, a VAT-taxable person (so-called “habitual exporter”, who can also be a non-resident VAT-taxable person having a direct VAT registration in Italy or a fiscal representative) can have VAT “exempt” purchases (including import of goods), by (electronically) notifying to the supplier (or to the Customs office) a specific declaration, a so-called “letter of intent”.

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