A company established in the European Union can recover its VAT in Italy as long as it does not conduct any taxable operations in the country. VAT is then deductible from its business expenses and, consequently, it can recover a certain amount of the costs incurred in a commercial transaction.
The purpose of this article is to assist you in your administrative procedures, summarising the key elements of the VAT refund process in Italy. This subject of course relates to companies established within the European Union. If this is not the case, you will first need to ensure that there is a bilateral agreement between Italy and the country of your company headquarters.
Italy currently has bilateral agreements with Norway and Switzerland; other third-party countries are required to appoint a tax representative to represent them in tax affairs in the country.
ITALIAN VAT REFUND PROCEDURES
First, you must list potentially refundable expenses in Italy.
Below is a summary table of deductible expenses; please note, however, that this is not exhaustive and that certain categories may have specific provisos.
|Hotel and accomodation||YES|
|Passenger transport||YES (with driver)|
|Conferences and seminars||YES|
You can also consult the official document of the European Commission for further information on Italian VAT refund procedures.
WHAT IS THE DEADLINE FOR SUBMISSION?
The request must be submitted by 30th September of year n+1 to which the refund refers.
Your dossier can be filed quarterly or annually. However, you must check that your refund request duly complies with the minimum thresholds: 200 euros for a quarterly request and 25 euros for an annual request.
WHAT SUPPORTING DOCUMENTS ARE REQUIRED?
You will need to supply ALL documents needed to consider the request: they include the originals of the invoices showing the Italian VAT number of the suppliers and the VAT amount and/or all import documents. You will also be required to present a certificate of your capacity as a taxpayer, which will entitle you to a refund.
Be aware that the Italian tax authority imposes very strict requirements concerning the quality of the VAT refund request dossier.
Based on experience, ASD advises you to submit a complete and valid claim in order to ensure swifter processing and to avoid any inconvenience during the procedure.
WHAT IS THE ITALIAN VAT REFUND PERIOD?
The member State then has 6 months to process your complete dossier with effect from the date of receipt. During this period, the applicant may be contacted by the Italian tax authority to supply additional documents. Once the request is approved, payment is made within the next 10 days.
If your request is rejected, you will be notified of the reason within 6 months of its receipt. Interest is then paid in the event of a late refund with effect from the 180th day after the date of receipt of the request. However, interest is suspended when the documents requested from the applicant are not provided within 15 days of the date of the request and resumes on production of the documents.
It is important to note this specific characteristic of the Italian VAT refund procedure. You will need to open a “foreign bank account” or a “foreign postal account” in the name of the applicant in an authorised bank in Italy before a refund can be made. Then the refund can be made into an account in the name of the applicant in his country. In this case, you will need to provide the BIC (Bank identifier code) and the IBAN (International bank address number) of the account.
Be aware that these formalities can be handled fully by a tax agent or representative to facilitate your procedures in the country and thereby comply with the legislation in force.
This solution is often used when the deductible VAT amounts are large or when the categories of expenses require in-depth analysis.
ASD Group is a tax firm specialising in the recovery of VAT. For further information on our services please visit our dedicated page or contact us via our contact form. We shall be delighted to assist you in handling your procedures and to deal with your refund requests. Be aware that we can recover your VAT, not only in Italy but also in the 27 other member States of the European Union.