Relevant VAT changes have been introduced by Budget Law 2018 (Law no. 205/2017, published in the Official Journal on 29 December 2017 and in force since 01 January 2018) and other year-end measures.
Some of the most important Italian VAT news are briefly described here below.
Change in the reporting frequency for 2018 filing of Listing of invoices data
The Listing of the invoices data (formerly "Spesometro"), normally to be filed on a quarterly basis, for 2018 can be filed on a bi-annual basis and, more precisely:
- by 30 September 2018, for data referring to the 1st half of 2018) and
- by 28 February 2019, for data referring to the 2nd half of 2018.
As of 2019, this listing should be abolished since – as a matter of fact – it will be replaced by the e-invoicing and the reporting of cross-border transactions (see below).
As of 01 January 2019, e-invoicing will become mandatory for all B2B and B2C supplies of goods and services between parties that are resident, established or merely registered for VAT purposes in Italy (in the case of B2C, provided that the customer expressly asks for an invoice).
This will be a relevant extension of e-invoicing, which is currently mandatory only for B2G (Business to Government) transactions.
To implement a similar extension, Italy has asked the EU Commission for a specific derogation, which is still to be granted.
B2B and B2C e-invoices should be issued:
- using the "Exchange system" (so called, "SDI system"), i.e. the platform currently used to transmit B2G e-invoices and which allows the Italian Tax Authorities to automatically collect details of e-invoices;
- according to a specific format, i.e. "FatturaPA format" currently used for B2G e-invoices, although in the future additional formats could be used moving from other European formats or standards.
In the event that B2B or B2C e-invoices do not comply with said requirements, they will be treated as not having been issued and related (heavy) penalties will possibly be charged.
As mentioned, the e-invoicing extension will enter into force as of 01 January 2019. However, in certain specific industries (e.g. motor fuel supplies, Public subcontracts) the B2B and B2C e-invoicing will become mandatory as early as 01 July 2018.
Reporting of cross-border transactions
As of 01 January 2019, a new VAT fulfilment shall be handled. All VAT taxable persons that are resident, established or merely registered for VAT purposes in Italy must file a report of all cross-border transactions documented by an invoice. Such report should be filed by the end of the month following that in which invoices (other than e-invoices and customs bills) are issued or received. Data and instructions for the electronic filing will be provided by a Regulation yet to be adopted.
In the event of the omitted or incorrect filing of such report, a penalty of EUR 2,00 per invoice may apply, with a maximum penalty of EUR 1,000.00 per quarter. However, if the filing is carried out or amended within 15 days after the mandatory deadline, the penalties will be reduced to EUR 1,00 per invoice, with a maximum penalty of EUR 500,00 per quarter.
Rescheduling of the VAT rate increase
VAT rate increases announced for 2018 have been postponed. Budget Law 2018 has rescheduled the VAT-rate-increases, as follows.
The reduced 10% VAT rate will increase:
- from 10.00% to 11.50% as of 01 January 2019;
- from 11.50% to 13.00% as of 01 January 2020.
The standard 22% VAT rate will increase:
- from 22.00% to 24.20% as of 01 January 2019;
- from 24.20% to 24.90% as of 01 January 2020;
- from 24.90% to 25.00% as of 01 January 2021.
However, these VAT rate increases will not automatically apply, since they could be replaced (in full or in part) by provisions (of another kind, i.e. not related to the VAT rates) that (fully or partially) guarantee the same positive effects on public finance balance (through the achievement of higher public revenues or cost savings).
The extra-reduced 4% and 5% VAT rates will remain unchanged.
Split payment extension
As of 2018, the application of the split payment has been furtherly extended, including entities with a State shareholding of no less than 70%. The list of entities that are obliged to apply this peculiar mechanism is available via this link:
As known, the split payment is a peculiar mechanism, according to which VAT is charged by the supplier according to standard rules, but the customer pays the supplier only the net amount and the customer pays the related VAT amount (if due) directly to the Tax Authorities.
Shorter term for input VAT deduction
New rules apply to invoices and customs bills issued as of 01 January 2017. The related input VAT can be deducted (at the latest) by the deadline for filing the annual VAT return referring to the year when the right of deduction arises (see Article 19, paragraph 1, Presidential Decree 633/72, as modified by Law Decree 50/2017 implemented by Law 96/2017). Therefore, operatively, input VAT referring to invoices issued in 2017 can be deducted, at the latest, by 30 April 2018.
This is a relevant reduction, since, formerly, said term was extended until the deadline for filing the annual VAT return referring to the second year following the year when the right of deduction has arisen. For instance, input VAT referred to invoices issued in 2016 (still) can be deducted at the latest by 30 April 2019.
New rules will have a relevant impact mostly on year-end transactions. In case of supplies of goods performed in December 2017, for instance, it would be important to agree with the supplier to immediately receive the related invoice, so that the acquiring company can proceed with the related booking shortly and, in any case, by 30 April 2018. Also, some IT support would be necessary, in order (for instance):
- to book a purchase invoice in February 2018 and (at the same time)
- to include it the VAT return referred to the former year (i.e. FY 2017) and
- to be sure not to consider it (also) in the current financial year (i.e. FY 2018, the year of the related booking).