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Italy: VAT amendments; action steps before 1 January 2020 effective date

Italy: VAT amendments; action steps before January 2020

Amendments to a value added tax (VAT) directive and a VAT implementing regulation—referred to in English as the “2020 Quick Fixes”—are set to be effective 1 January 2020.

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Italian businesses need to consider certain action steps to prepare for these VAT changes.

The amendments include:

  • A mandatory check of the customer’s VAT identification number (an additional substantive condition for the application of the exemption with respect to an intra-Community supply of goods)
  • Increased legal certainty and harmonized application of VAT rules when determining the VAT treatment of chain transactions, including triangular transactions
  • Modified VAT rules for call-off stock arrangements for uniform application in the EU
  • Identification of the documentary evidence to be used to claim zero-rating for intra-Community supplies

There are certain action steps that taxpayers may want to consider for the 1 January 2020 deadline such as verifying that all customers have VAT identification numbers that appear in the VIES database (currently, not a requirement in Italy to claim zero-rating for intra-EU suppliers); validating the current VAT treatment of chain transactions by all taxpayers; and validating current procedures for collecting and retaining documentary evidence of intra-EU transports of goods.

Because Italy has already implemented “call-off stock simplifications” that essentially appear to be in line with the new rules, immediate action does not appear to be pressing.


KPMG observation

The Italian tax authorities historically have taken a very strict approach to proof of intra-EU transport, and tax professionals believe the Italian tax authorities would probably continue to apply the new rules very strictly. There is a strict deadline (the 10th day of the month following the supply) by which the purchaser is to provide the vendor with a written statement that the goods have indeed been dispatched to the EU Member State destination. Italian tax authorities would no longer allow vendors to obtain similar statements from customers long after the supply. Until now, the Italian tax authorities have usually allowed vendors to obtain similar statements from their customers even a long time after the supply; with the new rules, this would no longer be possible.

Read an October 2019 report [PDF 158 KB] prepared by the KPMG member firm in Italy

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