Implementing decision 2020/1105 - Amendment of Implementing Decision (EU) 2017/784 authorising Italy to derogate from Articles 206 and 226 of the VAT Directive - Main contents

EN

Official Journal of the European Union

L 242/4

By Council Implementing Decision (EU) 2015/1401 (2), Italy was authorised until 31 December 2017 to require that value added tax (VAT) due on supplies to public authorities was to be paid by those authorities to a separate and blocked bank account of the tax authorities. That special measure constituted a derogation from Articles 206 and 226 of Directive 2006/112/EC in relation to VAT payment and invoicing rules.

By Council Implementing Decision (EU) 2017/784 (3), Italy was authorised to apply the special measure until 30 June 2020, and the scope of that special measure was broadened to include supplies to certain companies controlled by public authorities and to companies listed on the stock exchange that are included in the Financial Times Stock Exchange Milano Indice di Borsa (‘FTSE MIB’) index.

By letter registered with the Commission on 4 December 2019, Italy requested that the authorisation to apply the special measure be prolonged until 31 December 2023 and that the scope of the special measure be restricted to supplies of goods and services to public authorities only. By letter registered with the Commission on 27 March 2020, Italy modified its request so as to make the requested prolongation identical in scope to the authorisation granted by Implementing Decision (EU) 2017/784.

By letter dated 5 May 2020, the Commission informed the other Member States of the request made by Italy. By letter dated 6 May 2020, the Commission notified Italy that it had all the information necessary to consider the request.

The special measure is part of a package of measures introduced by Italy in order to counter tax fraud and evasion. That package of measures, including an electronic invoicing obligation as authorised by Council Implementing Decision (EU) 2018/593 (4), has replaced other control measures and allows the Italian tax authorities to cross-check the different operations declared by the operators and to monitor their VAT payments.

Italy considers that, in the context of the package of measures implemented, mandatory electronic invoicing reduces the time needed by the tax administration to become aware of the existence of a potential case of tax fraud or evasion. However, Italy also considers that, in the absence of the split payment mechanism introduced by the special measure, recovery from the tax fraudsters or evaders once the cross-check has been carried out could be impossible if they are insolvent. Thus, the split payment mechanism, as an ex ante measure, has proved to be more effective than mandatory electronic invoicing which is an ex post measure. The definitive data on the effectiveness of the special measure show that it has been even more effective than expected.

One of the effects of the measure is that suppliers, being taxable persons, are not able to offset the VAT paid on their input with the VAT received on their supplies. Such suppliers may constantly be in a credit position and may need to ask for an effective refund of the VAT paid on their input from the tax administration. According to the information provided by Italy...