Italy: IRA clarifies VAT treatment rules for motor vehicle taxes and fees paid through PagoPA
On April 7, the Italian Revenue Agency issued Letter No. 182/2022, explaining the rules for VAT exemption on vehicle tax reimbursements payable to the payment service provider with the introduction of the PagoPA.
What is PagoPA?
PagoPA is an electronic payment system that is accessible across Italy and is intended for all transactions to Italian government agencies. It enables taxpayers to make electronic payments to central and local government agencies, as well as other organizations (e.g., public companies, schools, universities, and local health authorities). Available payment methods include:
- Duties
- Taxes
- Utilities
- School fees
- Membership fees
- Stamp duties
Background
An automobile fleet management company collected vehicle tax and fee payments through PagoPA system. The taxpayer wanted to confirm what is the VAT treatment of the taxes collected in its automobile fleet management company.
Tax authorities clarified that:
1.If the connection between the business and its customers is deemed an obligatory representation, payment for vehicle taxes via PagoPA does not contribute to the creation of the tax base; and
2.The consideration for collecting the vehicle tax and invoicing it by the taxpayer is VAT exempt.
Source: agenziaentrate.gov.it
