The VAT Italy system is very difficult to understand and apply. Many foreign operators ask how VAT works in Italy.
We try to make an overview on this issue for foreign operators who want to sell their products in Italy.
VAT Italy is applied at rates of 4%, 10% and 22%. 22% is the ordinary rate. The other rates concern some products and services (for example pasta, bread, milk, butter, cheeses, etc. 4%, (restaurants, meats, fish, honey, etc. 10%).
There are several services that are exempt from VAT Italy (insurance, banking, health services, housing leases, etc.). VAT Italy, as in all Europe, is a tax that weighs on the consumer, but must be paid by the professional operator (professional, company, company, institution, etc.)
VAT NUMBER IN ITALY
The VAT number in Italy must be requested by all Italian professional operators and by foreign operators who establish a permanent organisation in Italy.
Foreign operators, who sell their products directly to final consumers (B2C sales) or who have to pay VAT in Italy and who therefore must also recover it must request it.
The obligation for the VAT Italy registration request for foreign operators who sell in the country, starts from the moment in which they make sales for a cumulative amount exceeding 35,000 euros to private consumers.
All Italian professional operators must request a VAT number when they start commercial, industrial, artisan, professional and service activities.
Foreign operators, without permanent establishment in Italy, must request the VAT number in Italy, when they constitute a permanent organisation, or they exceed the limit of 35,000 euros of sales to consumers (B2C trade)
Other cases where it is not mandatory to request the consignment, but it becomes useful or necessary, are those in which the foreign operator buys or imports goods into Italy and resells them, always in Italy to professional operators. In this case, purchases are subject to VAT but resales are not, since sales to other Italian VAT numbers, made by foreign operators and non-residents, are subject to reverse charge. This situation involves the formation of a VAT credit which must be requested for a refund. Here, in this case, it becomes necessary for the foreign operator to identify himself or appoint a VAT representative.
The appointment of a tax representative for VAT purposes in Italy is possible for all foreign operators, but it is the only way envisaged for companies based outside the European Union. In this way, the foreign company, after obtaining an Italian tax code, obtains a VAT number. With this you can issue and receive invoices, recover VAT on purchases made in Italy, make payments of VAT on credit, obtain tax refunds, present the necessary declarations.
The tax representative in Italy is jointly and severally liable for all the obligations of the foreign company, including the VAT due and even any taxes that may arise in Italy. There is a ruling by the Supreme Italian Court in this direction (18759 of 17 June 2014). For this reason, the tax representative must be protected with a guarantee to cover these risks.
Direct identification is a system provided for European Union operators to request a VAT number without the appointment of a tax representative. Obviously this system allows the foreign operator to use an Italian VAT number. We have had some cases of VAT refunds in which the Fiscal Administration has also requested the U.E. operator the appointment of a tax representative.
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