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Italy VAT group rules update

  • May 17, 2021

Italy has updated its guidance on the rules for VAT Groups. These are associations of related companies using a single VAT number, and zero-rating intra-company supplies to reduce cashflow movements.

Following a recent ruling, a Spanish-based enterprise supply its Italian subsidiary with a fixed establishment was deemed to be making a taxable supply. This is based on the Skandia case - the supply of support services by the head office of a Spanish enterprise member of a VAT group to its fixed establishment in Italy must be deemed relevant for VAT purposes.

The Spanish enterprise opted for the advanced VAT grouping regime provided by title 9, chapter 9 of Law No. 37 of 28 December 1992 (the Spanish VAT Law). After consulting the Spanish tax authorities (Note 2020_ENQ067, received by tax authorities on 30 November 2020), the tax authorities noted that, with the introduction of the advanced VAT grouping regime, the Spanish legislator intended to implement in national legislation the provisions of article 11 of the VAT Directive.

Need a fiscal representative in Italy?

Non-EU businesses selling in Italy will need to appoint a fiscal representative alongside completing VAT registration and returns.
Fiscal representatives are responsible for the accurate VAT submissions of their non-EU clients.
Avalara offers a Fiscal Representative Service as part of its international VAT and GST Registration and Returns Service.

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Researching Italian VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade. 

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