Recently-approved law changes will have a direct and immediate impact on entities registered in Italy for VAT purposes. 

Italy has recently approved law changes that will have a direct and immediate impact on entities registered in Italy for VAT purposes. Here is a brief summary of the upcoming changes.

Introduction of quarterly VAT returns

This is a new requirement in Italian VAT law and will come into effect from 1 January 2017. Until now, taxpayers were obliged to submit returns annually, however payments had to be calculated and paid on monthly/quarterly basis. After January 2017 taxpayers will be obliged to file a quarterly VAT return that will be compared with payments made to determine any discrepancies. This change does not remove any of the current obligatory filings (VAT liquidations, payments, annual VAT return, VAT books maintenance etc.).

Any identified discrepancies mentioned above will be subject to additional questioning from Italian authorities and insufficient explanations (or failure to observe the deadline) may result in penalties of between €500 and €2,000.

The quarterly return will be due by the end of the second month following the reporting period (with the exception for Q2 for which the return will be due by 16 September).

Quarterly invoice reporting

Italy is about to follow in the footsteps of countries like Slovakia and the Czech Republic in introducing its variation of control statements. From 1 January 2017, taxpayers will be obliged to file the report showing a list of invoices issued and received on a quarterly basis. The report must contain at a minimum:

  • Counterparty details (name, address)
  • Date and invoice numbers
  • Taxable basis
  • VAT rate and VAT amount
  • Type of transaction (purchase or sale).

The report should also contain customs documents that were used to report import VAT values as well as exports and cross-border transactions. The deadline for filing is aligned with the aforementioned newly-introduced quarterly return – so the last day of the second month following the reporting period.

Failure to file the listing may result in penalties amounting to €1,000.

Compliance obligations to be removed

Planned changes also remove some of the current reporting obligations:

  • Intrastat report for acquisitions (both goods and services) is to be cancelled from 2017
  • Black List reporting – with immediate effect.

Changes in the current obligations

Italian lawmakers have also decided the following:

  • Deadline for the annual return is to be between 1 February and 30 April of the year following the reporting period. However for the 2016 annual return, the deadline is to be 28 February
  • A bank guarantee will be required for VAT refunds of an amount more than €30k (currently it is €15k)
  • VAT warehouse rules are to be changed (from April 2017):

- Regime is to be extended to Italian goods. In such a case VAT is to be paid by the warehouse operator and reclaimed by the purchaser through self-invoice (autofattura).

For intra-Community transactions involving VAT, warehouse VAT is still to be settled by the purchaser through the reverse charge mechanism.