Italy VAT returns

Once registered for value added tax (VAT), businesses must declare any taxable transactions and pay any VAT due.

All taxpayers must file a quarterly VAT return, Comunicazione Liquidazioni Periodiche IVA. This is due on the last day of the second month following the reporting quarter end. For example, the Q1 VAT return deadline is 31 May.

In addition to the quarterly VAT return, a quarterly invoice listing, formerly known as Spesometro, is also due. This has replaced the previously annual submission of sales and purchase invoices. The filing deadline is the same as the quarterly VAT return.

An annual VAT return is still required, and the reporting deadline is 30 April of the year following the reporting deadline.

Returns should be based on the accounting records kept to exacting Italian accounting and tax standards. These records are known as the Italian Register (Registro IVA).

Tax payers with an annual turnover above €700,000 (or €400,000 for services) must remit any VAT due each month. Businesses below these amounts can opt to pay quarterly but must pay a 1% non-refundable surcharge.

As well as declaring the Italian VAT on any sales, the VAT return also lists VAT on purchases (inputs) that can be offset against the sales VAT due. This includes import VAT. Non-resident companies are allowed to reclaim such input VAT on the same basis as any resident company. Examples of VAT deductions include:

• Conferences and seminars

• 50% of parking costs

• Business entertainment (not allowable)

• Advertising

• Import VAT

• VAT on the purchase of goods for resale

• VAT on capital expenditure

Returns are posted online. Any payments can be made through the Target system via the F24 form.

The penalty for late payment of any Italian VAT due is 30% of the VAT. In addition, there is an interest charge of 2.5% a year. If a return is late, the fines can reach over 240%.

Where the Italian VAT inputs exceed the outputs, this surplus, or credit, is due back to the taxpayer. Italy is one of the slowest repayers of VAT credits in Europe. Companies have to wait until the calendar year end before they can submit a claim for a refund.

This can then be a long process, taking up to two years. In addition, the Italian tax authorities are increasingly asking for a two- to three-year bank guarantee for the credit.