The EU’s Commission has granted authority to Italy to extend its Split Payment programme until 30 June 2023.
The measure requires customers to pay the VAT element of select transactions into restricted VAT Accounts at the banks of their vendors. These accounts may generally only be used to remit VAT on submitted fillings by the tax payer. This way, the tax authorities can closely monitor VAT due, and limit the chance of non-repayment. Italy introduced its split payment plan in 2017.
Split payments in Italy is restricted to business to government contracts. It has also been introduced in Poland in sectors prone to VAT fraud. Romania recently withdrew its universal split payment regime under instruction by the EC on the grounds that it we disproportionate in terms of bureaucracy required compared to expected fraud prevented.
