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Italy has a value-added tax (VAT) system known as ""Imposta sul Valore Aggiunto(IVA)  '' with a standard rate of 22% and reduced rates of 10% and 4% for certain goods and services.

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Fiscal representation in Italy

The fiscal representative is responsible for ensuring that the non-resident company complies with all Italian VAT rules and regulations, including the submission of VAT returns and payment of VAT, as well as representing the non-resident company in any tax-related matters or disputes.

In general, a fiscal representative is required when a non-resident company has no permanent establishment or fixed place of business in Italy.

Italy VAT reverse charge

In Italy, Article 196 of the VAT Directive (Directive 2006/112/EC) pertains to the reverse charge mechanism for certain services provided by a non-resident supplier to a VAT-registered business in another EU member state. This article allows for the reverse charge to be applied, shifting the responsibility for reporting and paying the VAT from the supplier to the recipient of the services.

-Italian reverse charge on B2B Services

Scope of Application: The reverse charge on B2B services generally applies when services are provided by a non-resident supplier to a VAT-registered business in Italy.

-Domestic reverse charge is mandatory when non-established companies sell goods B2B in Italy

When a non-established company, meaning a company without a fixed establishment or permanent establishment in Italy, sells goods to another VAT-registered business in Italy, the domestic reverse charge mechanism may apply.

Frequency of Italian VAT returns

  • Quarterly returns

  • Annual return is also required

Italy VAT compliance
- What Global Trade can help you with

  • VAT Registration: Businesses meeting the threshold for VAT registration must register with the Italy tax authorities to obtain a VAT number. This enables them to charge, collect, and remit VAT on their taxable supplies.

  • VAT Rates and Invoicing: Businesses must correctly apply the appropriate VAT rates to their goods or services and issue valid VAT invoices to customers. Invoices should contain specific information required by Italian VAT regulations.

  • VAT Reporting and Returns: Businesses are responsible for submitting regular VAT returns to the tax authorities, reporting their VAT liabilities and input tax credits. Returns must be filed within the prescribed deadlines and reflect accurate calculations.

  • Intrastat Reporting: If a business exceeds the threshold for intra-EU trade, they may be required to submit regular Intrastat returns. Intrastat reports provide statistical information on the movement of goods between EU member states.

  • Reverse Charge Mechanism: Businesses should understand and apply the reverse charge mechanism correctly in specific situations where the recipient is responsible for reporting and paying the VAT instead of the supplier.

  • VAT Compliance Documentation: It is important to maintain proper records and documentation to support VAT transactions, including invoices, VAT certificates, and relevant business documents.

  • Compliance with VAT Rules and Regulations: Businesses should stay updated with any changes or updates to Italian VAT legislation and ensure compliance with all applicable rules and regulations.

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