Italy: VAT paid by companies for pre-paid SIM cards used by employees; refund opportunities

Italy: VAT paid by companies for pre-paid SIM cards

Italian tax authority issued guidance (Resolution no. 69/E, published on 22 October 2020) clarifying that companies that purchase pre-paid/top-up SIM cards (“carte SIM ricaricabili”) directly from telecom operators are entitled to recover the amount of value added tax (VAT) charged by the operators if the SIMs are used by company employees for business purposes.


Before this guidance, it was uncertain whether companies could recover VAT on pre-paid SIMs purchased directly from telecom operators for use by employees for business purposes. This uncertainty derived from the fact that the sale of prepaid SIMs (and more generally “technical means” enabling the use of telecommunications services) falls under the special single-stage tax regime. Under this system, the output VAT on the sale is accounted for and paid by the telecom operator (as the holder of the concession or license to provide the telecommunications services or the “first trader”) on the basis of the price charged to the final customer, while all further transactions down the chain are disregarded (that is, they fall outside the scope of VAT).

Ordinarily, the documents issued by the first trader regarding the sale of pre-paid SIMs to the public would not show VAT separately from the price of the service. As an exception to this rule, taxable persons are entitled to ask for a VAT invoice, in which case the first trader is obliged to provide a separate indication of the amount of VAT due.

The tax authority’s guidance clarifies that the amount of VAT shown on the invoice issued by the telecom operator to business-to-business (B2B) customers is recoverable under the ordinary VAT rules if: (1) the SIMs are used by company employees for business purposes; and (2) the amount of VAT is shown separately on the invoice issued by the telecom operator.

KPMG observation

The clarification provided by the guidance not only allows VAT recovery in the future but also provides an opportunity for VAT refund claims to be submitted by all eligible taxable persons that took a prudent approach and did not recover VAT during past years on prepaid SIMs for telecommunications services purchased directly from telecom operators under the single-stage tax regime and used, for business purposes, by their employees.

Read an October 2020 report [PDF 155 KB] prepared by the KPMG member firm in Italy

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