Italy IT support services for financial services are VAT exempt

Mon 18th Mar 2013

The Italian Supreme Tax Administration Court has ruled that Information Technology services provided as part of a Italian VAT exempt financial services may also enjoy a VAT exemption.

The review concerned IT processing services providing by a company working on credit card payments for banks.  Since the support was essential to ensure the provision of the service and processing of electronic payments, it should also be considered a financial service.

Key to separate input VAT on exempt and non-exempt services

This means that the company should not charge Italian VAT to its bank customers.   However, in turn, it may not recover any input VAT it suffers as a direct element of providing the card payment processing services.  It is therefore important to determine a fair split of input VAT if the company was also providing non-VAT exempt services to VAT liable customers.

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