ITALY: COVID-19 VAT IMPLICATIONS

ITALY – Update 1st July

Italy Postpones Deadline for Certain Tax Payments

The deadline for payments of tax due resulting from relevant income tax returns, regional tax on productive activities (IRAP) returns and value added tax (VAT) returns has been extended from 30 June 2020 to 20 July 2020 for certain taxpayers.

A 0.4% interest will then apply to late payments made between 21 July 2020 and 20 August 2020. The deadline extension applies with respect to taxpayers exercising economic activities falling within the synthetic indexes of reliability (indici sintetici di affidabilità fiscale, ISA), as approved by the Ministry of Economy and Finance, as well as similar taxpayers which fulfil the same requirements, and taxpayers opting for the favourable tax regime for small enterprises, which do not qualify for the extension granted by Law Decree No. 34 of 19 May 2020.

The deadline extension is provided by the Decree of the President of the Council of Ministers of 27 June 2020, published in Official Gazette No. 162 of 29 June 2020.

Source Credit – IBFD

ITALY – Update 28th May

Tax relief measures in “Relaunch decree” – Prepopulated VAT returns delayed till Jan 1, 2021

Tax relief measures included in Law Decree no. 24 of 19 May 2020—referred to in English as the “Relaunch decree”—are offered in response to the coronavirus (COVID-19) pandemic.

The Relaunch decree was published in the official gazette no. 128 of 19 May 2020. The Relaunch decree must be converted into law within 60 days of its publication in the official gazette, and it is possible that amendments could be made during this parliamentary conversion process.

 The Relaunch decree includes the following tax relief measures:

•  IRAP (local business tax) exemption
•  Tax credit relief
• Value added tax (VAT) measures and tax payment deferrals
• Tax litigation and tax authority procedures
• Export and excise measures
• Step-up in the tax basis of business assets

Source Credit – KPMG

ITALY – Update 25th May

“super-reduced” 5% rate of VAT for supplies of certain medical goods, but VAT exempted till December 31, 2020

Value added tax (VAT) relief measures and extensions of time to make certain tax payments are included in a new “law decree,” provided in response to the coronavirus (COVID-19) pandemic.

Law Decree no. 34 of 19 May 2020 (known in English as the “Relaunch decree”) is effective on its date of publication in the official gazette—19 May 2020.

The Relaunch decree now must be converted into law within 60 days of this date of publication.

VAT relief

The Budget Law for 2020 established that the VAT rates in Italy (both the 22% standard rate and the 10% reduced rate) would automatically increase as of 1 January 2021 unless certain budgetary targets were reached by that date. The Relaunch decree repeals this mechanism; thus, unless the law is revised, the 22% standard rate and the 10% reduced rate will remain in effect during 2021.

The Relaunch decree also introduces a “super-reduced” 5% rate of VAT for supplies of certain medical goods needed to address the COVID-19 outbreak. These goods include ventilators, monitoring systems, infusion pumps for drugs, endotracheal tubes, and certain protective devices and masks, among many other items. Supplies of eligible goods if made by 31 December 2020 will be VAT-exempt, with the right to recover VAT.

Other relief measures

The Relaunch decree includes further relief measures. For instance, it extends certain deadlines for tax payments and social security contributions (deadlines already extended by the Cure Italy decree and the Liquidity decree). The extended deadline for certain remittances is now in September 2020.

A requirement (April 2019) directed retailers to electronically report their daily receipts within 12 days of the date of sale. This was subject to a six-month “grace period.” The Relaunch decree extends the grace period to 1 January 2021 for certain retailers whose turnover does not exceed a threshold of €400,000.

Under the Relaunch decree, for fiscal year 2020, the annual cap on offsetting a credit for one type of tax against liabilities for another type of tax has been increased to €1 million (from €700,000).

Source Credit – KPMG

ITALY – Update 20th May

Italy withdraws VAT rise to 25% on COVID-19 worries

Italy has withdrawn a planned increase in its standard VAT from 22% to 25% on 1 January 2021. The increase was a budget measure to cover the risk that Italy would breach Euro currency zone limits on budget deficits. The move is part of a range of measures announced 14 May 2020 to support the economy during the COVID-19 crisis.

The rise has already been delayed twice. Italy had already rolled over the planned VAT rise from 2020. The plan was for the current standard rate of 22% to rise to 25% in January 2021, and then to 26.5% in January 2022. This was contained within the 2020 Budget Law. There would also have been an increase in the reduced rate of 10% to 12% in January 2021.

The new measures announced this week effectively block this rise.

The increase had originally been scheduled in the 2019 Budget Law for 1 January 2020. It had already been delayed one year in 2018. It was designed to ensure Italy remained within the Euro currency budget deficit rule of 3% of GDP. However, on both previous delays, compromises have been found to avoid the rise.

Source Credit – Richard Asquith – ( Avalara)

ITALY – Update 19th May

Relaunch decree: Masks exempt from VAT until the end of the year

Unofficial translation

The decree then provides for the reduction of VAT on the goods necessary to contain and manage the epidemic. It will therefore pass, explains Palazzo Chigi, from 22% to 5% on medical and individual protection goods and devices such as lung ventilators, masks and other safeguards for worker safety. But until December 31, 2020, the sale of these goods – therefore masks and security devices – is totally exempt from VAT.

Source Credit – helpconsumatori.it

ITALY – Update 11th May

Notice on deferral of VAT return, payment due dates (COVID-19)

The Italian tax authorities published Notice no. 11/E (6 May 2020) providing some additional guidance on the value added tax (VAT) provisions under Law Decree no. 18/2020 (referred to as “Cure Italy” decree) and Law Decree 23/2000 (referred to as the “Liquidity” decree).

Return due dates, as deferred

The Cure Italy decree (article 62) generally postpones to 30 June 2020 the deadlines for all tax obligations and filings (other than tax payments) falling between 8 March 2020 and 31 May 2020 for taxpayers with a tax domicile, registered office or operations centre in Italy.

The May 2020 notice specifies that this postponement applies with regard to the following:

• Annual VAT return for 2019 (original deadline of 30 April 2020, now due 30 June 2020)
• First quarter (Q1) 2020 TR form for quarterly refund claim (original deadline of 30 April 2020, now due 30 June 2020)
• First quarter (Q1) 2020 quarterly communication of VAT settlements (original deadline of 1 June 2020, since 31 May 2020 is a Sunday, now due 30 June 2020)
• First quarter (Q1) 2020 communication of cross-border transactions (‘Esterometro’ – original deadline of 30 April 2020, now due 30 June 2020)

Deferral of VAT payments due for March and April 2020 for members of VAT pooling arrangements or VAT groups

Article 18 of the Liquidity decree allows for deferral of certain tax payments—including VAT, withholding tax, and social contributions—that were originally due in April and May 2020 for taxpayers whose tax (fiscal) domicile, registered office or operations centre is in Italy. This rule applies for:

• Businesses or professionals with revenues less than €50 million in the previous fiscal year, if there is a reduction in turnover of at least 33% in March or April 2020 when compared to March or April 2019, respectively
• Businesses or professionals with revenues greater than €50 million in the previous fiscal year, if there is a reduction in turnover of at least 50% in March or April 2020 when compared to March or April 2019, respectively
• Businesses or professionals that started up after 31 March 2019

The tax authority previously clarified that taxpayers adopting either VAT pooling arrangements or VAT group schemes (when, for instance the revenues or turnover may not be met by all the pooling or group members) were entitled to suspend VAT payments of all the pooling or group if the member(s) representing the majority of turnover or revenues of the pooling or group met the revenues or turnover decrease conditions.

The May 2020 notice clarifies that if only some of the members satisfy the conditions for the VAT payment deferral (when considered singularly) without these conditions being satisfied at a pooling or group level, the eligible members may benefit from the tax deferral and be excluded from the calculation of the VAT payable by the pooling or group by 18 May 2020.

Postponement of VAT filings for non-established taxpayers if VAT-registered in Italy

A provision (article 62) of the Cure Italy decree concerns postponement of VAT filings and provides that this relief is reserved for those taxpayers whose tax (fiscal) domicile, registered office or operations centre is located in Italy, thereby apparently excluding from the scope of the provision those taxpayers not established in Italy but that are VAT-registered in Italy (through either a “direct” registration or an Italian fiscal representative).

The May 2020 notice, however, has interpreted the law provision broadly and allows for the postponement of VAT filings (listed above) by non-established taxpayers VAT that are VAT-registered in Italy.

Source Credit – KPMG

ITALY – Update 5th May

VAT exemption for the supply of respiratory face masks & no VAT rate increase in 2021

Recent indirect tax developments in Italy include the release of a ruling (No. 117) providing clarifications on proof of intra-EU transport on 23 April 2020 and an announcement from the prime minister on 27 April 2020 regarding additional VAT relief measures to be introduced in response to the coronavirus (COVID-19), including that there will be no increase in the VAT rates for 2021.

Clarifications on proof of intra-EU transport, after introduction of article 45a of EU Regulation 282/2011 

With Ruling No. 117, the tax authorities provide further official clarifications on the level of sufficient proof of intra-EU transport for purposes of obtaining VAT-exempt treatment, to be kept by an Italian supplier making intra-EU supplies of goods under “Ex Works” Incoterms, i.e., international trade terms for situations in which goods are delivered at the seller’s premises and the buyer is responsible for further transportation of the goods.

 With this official reply to a ruling request, released after the entry into force of Council Implementing Regulation (EU) 2018/1912 (which amended EU Regulation 282/2011 and introduced certain VAT “quick fixes” agreed upon at the EU level, including harmonized rules in article 45a for documenting intra-EU transport of goods, effective as from 1 January 2020), the Italian tax authorities confirm their position taken in the past with Ruling No. 100, dated 8 April 2019. The tax authorities reiterate in Ruling No. 117 that proof of intra-EU transport will be deemed sufficient as long as the following conditions are fulfilled: 

• They are able to identify all the parties involved (Italian supplier, carrier, and EU purchaser) and the relevant data for the underlying intra-EU transaction is provided; and
• The documentation is retained by the Italian supplier, along with the relevant intra-EU sales invoices, bank documents, contracts, and Intrastat forms.

To satisfy the requests for additional clarification expressed by economic operators, there are rumours that the Italian tax authorities may soon release a circular letter providing some procedural guidelines with respect to practical scenarios.

 Additional COVID-19 relief

The prime minister has announced the upcoming introduction of the following VAT relief measures (although no draft legislation has yet been published): 

• A new VAT exemption for the supply of respiratory face masks; and
• That there will be no increase to the VAT rates for 2021 (an increase of the standard VAT rate from 22% to 25% and an increase of the reduced 10% VAT rate to 12% had been planned for 2021).

Source Credit – Deloitte

ITALY – Update 29th April

Upcoming government decree will lift VAT on facemasks and other PPE, sources said Friday

An upcoming government decree will lift VAT on facemasks and other PPE, sources said Friday. It may also set aside one billion euros for proposals from parliament on fighting the coronavirus emergency, the sources said. The decree is expected to be approved by the end of the month.

Source Credit – ANSA

ITALY – Update 28th April

Update of technical requirements on SDI will not be enforced until 31 December 2020

The update of technical requirements on SdI live invoice reporting, commencing 1 October 2020, will not be enforced until 31 December 2020.

Source Credit – Richard Asquith – (Avalara)

ITALY – Update 17th April

The Italian Tax Authority has announced a number of measures for tax relief due to COVID-19 (such as suspension of VAT payment deadlines with a due date between 8th March 2020 and 31st May 2020 to 30th June 2020) however currently all easements apply to certain resident businesses only.

Source Credit – Accordance VAT

ITALY – Update 14th April

Heal Italy decree-law: Offset corporate tax credits with VAT & non-resident enties without fiscal representative can not benefit from deferrals of VAT return & payment

• Corporate tax credits can be used (without any limitation amount) for the payment of taxes (eg, value added tax (VAT), IRAP and withholding taxes) and social security contributions
• Non-resident entities that applied for direct identification for VAT purposes in Italy or appointed a tax representative will need to file VAT filings and related communications (ie, Intrastat models relating to intra-community transactions, VAT returns for 2019, requests for reimbursement or quarterly settlement of the VAT credit for the first quarter of 2020 and communication of the periodic settlements of the first quarter of 2020) within the ordinary deadlines.

Source Credit – Studio Legale e Tributario Biscozzi Nobili Piazza

ITALY – Update 14th April

Suspension of the payment of VAT will be extended for the month of April and May 2020

On 9th April – the Council of Ministers liquidity decree announced delays on VAT returns for April and May, may be delayed until 30 June. Repayments may be in via payment plan of up to 5 months. Small businesses (<€50million turnover) must show a 33% or more decline in revenues since March; Large businesses above this threshold must show a 50% or more decline. Businesses must show a 33% of more decline in revenues in certain regions.

Source Credit – Richard Asquith – (Avalara)

ITALY – Update 31st March

• Postponement of tax fulfillments (other than payments) for which ordinary deadline expires between March 8 and May 31, 2020.
• Extension of terms for the adoption of the financial statements and balance sheets for the financial year 2019.
• Tax credit of 60% of rents paid in March 2020 for the lease of retail shops (registered in cadastral category “C/1”) for execution of retail activities directly affected by lockdown limitations (not applicable to business concern leases, typical of the large distribution).
• Tax credit of 50% of expenses to sanitize work premises (up to 20keur).
• Suspension from March 8 to May 31, 2020, of terms for the tax offices’ activities concerning tax rulings, tax audits (except for automatic electronic controls), tax assessments, settlements and disputes; for the payments entrusted to the collection agents.
• Suspension, from March 9 to April 15, 2020, of deadlines to file appeals before tax courts and make related temporary payments. − For several subjects (as identified) and small taxpayers, all tax and social contribution payments due between March 16 and May 31 are postponed to May 31, 2020. For the other taxpayers, the deadline of March 16 is postponed to March 20, 2020.
• Conversion of Deferred Tax Assets (DTA) on tax losses and NID into tax credit in case of transfer, by December 31, 2020, of receivables due by defaulting debtors (subject to limits).

Source Link here

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