Italian VAT returns

Once registered for VAT, businesses must declare any taxable transactions and pay over any VAT due. From the start of 2017, Italy underwent a wholesale reform of its reporting regime.  Previously, only monthly payments were required, with an annual VAT return due the following year were required.  From 2017, quarterly VAT returns and invoice listings are required, too. Annual returns are still required. Below are details of the new regime, including interim measures for 2017 filings.

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 included 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 are 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.

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% per annum.  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 tax payer.  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 amount of the credit.

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