Italian VAT credits lost for non-trading companies

Wed 23rd Jul 2014

The Italian VAT authorities have confirmed that VAT credits due to non-operating businesses, or companies making long term VAT losses (and credits), are non-refundable.

It has been a long term problem for businesses operating in Italy, especially non-residents, to reclaim their excess VAT paid.  Unlike most other EU member states, companies have to wait for the Italian annual return to start the procedure for a reclaim.  Even then, the payment may take many months, perhaps even years.

The Italian authorities have now confirmed that such credits for loss-making entities may not even be offset against any other taxes due.