Italy controversial split VAT payments a success

Sat 12th Mar 2016

The Italian tax authorities confirmed this week that VAT revenues rose by €4.8bn in 2015 thanks largely to the implementation of the controversial split payments on VAT.

The measure requires government bodies to withhold sales VAT on payments to suppliers, and instead pay directly to the Italian Agenzia Entrate. This eliminates the cases of VAT fraud on public contracts whereby suppliers to the state have been under declaring VAT payments.

The measure required approval from the European Commission as it was a significant deviation from the EU VAT Directive, and potentially undermines the EU VAT regime of payments across the VAT chain.