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Italy: Tax Agency clarifies VAT Refund rulings for Electronic Services

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The Italian Revenue Agency published Letter No. 205/2022 on April 21, which clarifies the rulings of VAT refunds for electronic services.  

 

Background 

 

The taxpayer was an English firm with an Italian permanent establishment that purchased products in Italy for resale to Italian consumers as well as other EU member states. The taxpayer requested guidance about the VAT refund procedures for transactions involving zero-rated electronic services. 

 

 

IRA clarified that: 

 

1.While intra-EU distance sales and local sales of electronic services are exempt from VAT, the supplier may deduct taxes on purchases. 

2.The purchases made by the Taxpayer were not carried out by the unestablished EU subject, they did not qualify as intra-EU distance sales or local sales; and 

3.The average rate of VAT refunds for active transactions must be lower than the average rate of VAT refunds for passive transactions. 

 

 

Furthermore, the Taxpayer did not comply with the rules for claiming a VAT refund and, as a result, is not eligible to receive a reimbursement. 

 

 

Source: agenziaentrate.gov.it 

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