Italy extends VAT split payments
Italy has been granted approval by the European Commission to continue the use of anti VAT fraud split payments regime with state organisations, and to extend the measures to state-owned companies and stock market quoted companies.
VAT split payments
Where an EU member state believes, there is significant evidence of VAT fraud, it may apply to derogate from Articles 206 and 226 of the EU VAT Directive with regard to VAT payments and invoicing requirements made to public authorities.
Italy had detected evidence of extensive fraud on payments by suppliers to the Italian state. On this basis, it was granted permission to temporally implement a split payments regime until the end of 2017. This requires suppliers to pay the VAT element of invoices to the state directly to a blocked tax bank account with the tax authorities.
Since the implementation of this measure, Italy has reported higher than anticipated increase in VAT receipts. However, it has stated that it has not yet implemented all practical measures to remove the measure without the risk of lapses in collections.
In addition, Italy has since identified similar VAT payment fraud to state controlled companies and over 40 quoted companies. It has therefore requested an extension of the current measure, and for it to be extended to companies controlled by public authorities and companies listed on the stock exchange.
The commission approved the request this month, with implementation from 1 May 2017. The European Council of Ministers must ratify the decision, too.
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