Italy changes VAT rules on intra-community tax point
New Italian VAT legislation was approved recently, including the increase in Italian VAT rate to 23%. A further change was on the tax point on intra-community supplies of services.
The tax point is the moment when the liability to charge VAT crystallises. This is when the supplier must charge his customer the VAT due. For cross border – or intra-community – supplies of services, the old tax point was on determined a cash received basis. This was in conflict with the EU VAT Directive, and so has been amended.
The new rules change the tax point to the date when the service is completed, in accordance with the majority of other EU member states. For services spanning a calendar year end, the tax point is at the calendar year end date.
The exception to the above is if an interim cash payment is made. This triggers a tax point, with the VAT amount being calculated on the interim payment amount.