March 2019
In this article we summarise the main changes recently introduced in the Italian VAT law (Law no. 145/2018), as well as other VAT obligations coming into force in 2019.
Italian VAT rates remain the same for 2019. But, the standard VAT rate, which is currently 22%, will increase to 25.2% in 2020 and to 26.5% in 2021. The reduced VAT rate of 10% will be increased to 13% in 2020. It should be noted, however, that if the Italian government can find the necessary resources to cover its future budget needs, the planned rate increases might not come into force.
Cross-border communication (so-called esterometro)
Starting 1 January 2019, Italian residents and Italian established persons are required to submit to the Italian tax authorities a list of invoices issued to and received from parties that are not resident or VAT established in Italy. The submission to the tax authorities must be made electronically and must be transmitted by the last day of the month after the date of issuance/date of receipt of the invoice. (In other words, within the month after they are recorded in the VAT ledgers.)
Electronic transmission of the daily sales data
Taxpayers who provide their supplies pursuant to article 22 of the Italian VAT Code will be required to electronically record and transmit the data to the Italian tax authorities relating to the amount of their sales carried out during the day (so-called ‘daily considerations’). This obligation will be mandatory:
This mandatory regime replaces the registration obligation currently in place (the so-called ‘register of considerations’).
As of 1 January 2019, a general e-invoicing obligation is in place for all sales of goods/services carried out between persons resident or established in Italy. E-invoices are documents structured in an ‘.XML’ format. The seller electronically transmits e-invoices to the ‘SDI System’, which is managed by the Italian tax authorities. The SDI System then delivers the document to the purchaser.
The new obligation relates to business-to-business (B2B) and business-to-consumer (B2C) transactions where the customer explicitly asks for the invoice pursuant to art. 22 of the Italian VAT code.
Applicability to private customers
For time being, in the case of B2C transactions, when the customer requests an invoice, the supplier is obliged to issue it electronically to the SDI System and must also provide a paper copy to the customer.
In any case, starting 1 July 2019, the Italian tax authorities will make available a web site where consumers can review the e-invoices the supplier sent to the SDI.
Applicability to non-resident persons
E-invoicing obligations do not apply to non-resident taxpayers, even if they are directly registered for VAT in Italy or if they have a VAT representative. However, suppliers should provide non-residents with a paper invoice. Persons who are not resident and not established for VAT purposes in Italy are exempt from the mandatory cross-border communication provisions (see above).
Reduced penalties for the initial period
During the initial phase of implementation of the e-invoicing regime, the law grants more flexibility to the issuance of e-invoices through the SDI System. For the first six months of 2019, penalties will not be applied if the invoice is transmitted to SDI by the VAT settlement deadline. If an e-invoice is issued late, but within the VAT settlement deadline of the following period, the penalty will be reduced by 80%.
Starting from 1 January 2019 vouchers are distinguished as being either single-purpose or multi-purpose. Single-purpose vouchers are subject to VAT at the time of issuance and multi-purpose vouchers are subject to VAT at the time of redemption. A single-purpose voucher is one where all the information necessary for taxation is available at the time the voucher is issued. A multi-purpose voucher is one where all the information necessary for taxation is not available until the time of redemption.
The tax authorities have clarified that the reduced VAT rate of 10% applies to medical devices that are normally used for medical treatment, for disease prevention, and for medical and veterinary treatments, as classifiable under heading 3004 of the Combined Nomenclature in Annex 1 to Reg EU n. 2017/1925.
Starting in 2019 the number of taxpayers that can benefit from the facilitated regime called forfettario has been expanded. Under this regime, taxpayers do not have to collect VAT, they cannot deduct input VAT, and they are not subject to the mandatory e-invoicing regime. The tax rate applicable to these taxpayers is 15% and it is applied on a lump sum determined on the basis of annual revenues. To qualify for this regime the taxpayer’s revenues cannot not be more than EUR 65,000 for fiscal year 2018.
A general amnesty has been introduced for taxpayers who have made mistakes in their VAT filings. The amnesty, which is only for mistakes made before 24 October 2018, is available only so long as the mistakes did not impact on the determination of the VAT amount. To apply for the amnesty, the taxpayer must: i) pay EUR 200 for each fiscal year it made mistakes in its filings, and ii) correct the mistakes or omissions.
Michele Muratori
michele.muratori@bdo.it
Albi Halilaj
albi.halilaj@bdo.it