VAT Management in Italy

International VAT Consulting in Italy

We offer a highly specialised service for VAT management on behalf of foreign companies operating in Italy.

Our service is provided by Chartered Accountants, Auditors and Lawyers with specific expertise, who assist companies at every stage of the process.

Our operating model, which combines high specialisation with process digitalisation, allows us to support our clients online and remotely, streamlining communication and optimising operational efficiency to ensure fast and secure access to our services.

In an increasingly interconnected economic environment, proper VAT management in international operations is a crucial challenge for businesses.

Compliance with the rules on territoriality, proof of transport, reverse charge and self-billing not only ensures legal conformity but also contributes to efficient financial management and competitiveness in the global market.

📌 ISO 9001 Certification: ISY adopts a quality management system compliant with international standards, ensuring professional services that are reliable, transparent and focused on continuous improvement.

Management of International Business Transactions

VAT is one of the key aspects in managing international business transactions, both within the European Union and with non-EU countries.

Its correct understanding and application are crucial for companies and operators engaged in cross-border transactions.

Regulatory provisions, the distinctions between intra-EU and extra-EU operations and the requirements for taxation or exemption are fundamental pillars for effective and compliant management of international transactions.

1. Scope and Regulatory Framework

Foreign transactions are classified as:

• Transactions with EU entities, mainly governed by Legislative Decree No. 331/1993 (Articles 38–50).
• Transactions with non-EU entities, governed by Presidential Decree No. 633/1972 (Articles 7–8 and following).
• The correct application of VAT depends on the presence of three conditions: objective, subjective and territorial.

2. Territorial Requirement

Activities meeting the objective and subjective conditions fall within the scope of VAT only if the territorial requirement is also met — that is, if the transaction is deemed to take place in Italy.

Supply of goods (Art. 7-bis, DPR 633/72): taxable in Italy if the goods are located within the national territory at the time of supply. Supplies of goods from other Member States are also taxable if installed or assembled in Italy by or on behalf of the supplier.

Provision of services:

• If rendered to a VAT-registered entity, they are considered carried out in the country of the customer.
• If rendered to a private individual, in the country of the supplier.

This distinction, introduced by the 2010 reform (Directives 2008/8, 2008/9, 2008/117), redefined the criteria of territoriality and related exceptions (Articles 7-ter and following, DPR 633/72).

3. Intra-EU Transactions

3.1. Application Requirements

Transactions between VAT-registered entities established in different Member States are considered intra-EU transactions when:

• Both supplier and customer are VAT-registered in two different Member States.
• The exchange is for consideration.
• The goods are physically moved from one Member State to another.

3.2. Proof of Intra-EU Transport

Proof of transport is essential for VAT exemption.

If transport is arranged by the supplier, at least two of the following documents are required: delivery note (DDT), signed CMR, bill of lading, transport invoice, bank payment record, certification by authorities of the destination country or warehouse receipt.

If transport is arranged by the customer, in addition to the above, a written statement from the customer is required by the 10th day of the month following the transaction, indicating the destination country and the entity responsible for collection.

3.3. Requirements for VAT Exemption

To qualify for VAT exemption (Art. 41, D.L. 331/1993), the supplier must:

• Indicate the customer’s VAT number, validated through the VIES system, on the invoice.
• Correctly submit the Intrastat lists.

If these requirements are met, the supplier does not charge VAT. The intra-EU customer documents the transaction through invoice integration (Art. 46, D.L. 331/1993).

3.4. Invoice Integration

Integration consists of applying the domestic VAT rate to the invoice received from the EU supplier, numbering it and recording it in both the sales and purchase ledgers.

The operation is financially neutral, as the output VAT is offset by the input VAT.

If the transaction is exempt or non-taxable, the corresponding wording (“non-taxable” or “exempt”) must be indicated, along with any tax due if applicable.

3.5. Accounting Obligations

• Intra-EU supplies: invoice by the 15th day of the following month; separate entry in the sales ledger.
• Intra-EU acquisitions: entry in both the sales and purchase ledgers within 15 days of receiving the invoice.
• Non-transfer-of-ownership operations: recorded in a specific VAT register (Art. 50, paragraph 5, D.L. 331/93).
• Intrastat lists: mandatory for supplies and, in some cases, for services (Art. 49, D.L. 331/93).

4. Reverse Charge (Self-Invoicing)

Self-invoicing applies when the supplier or service provider is not established in Italy.

If the supplier is from the EU, the customer integrates the invoice.

If the supplier is from outside the EU, the Italian customer must issue a self-invoice pursuant to Art. 17, DPR 633/72.

The self-invoice must include:

• The wording “self-invoicing”.
• Details of the foreign supplier.
• Description and quantity of goods/services.
• Taxable and non-taxable amounts with corresponding VAT.

The invoice is recorded in both the sales and purchase ledgers, resulting in no VAT effect for the customer.

5. Extra-EU Transactions

5.1. Imports

An import consists of bringing goods into Italy from non-EU countries (Art. 67, DPR 633/72).

VAT is charged at customs on a taxable base including: price + customs duties + transport costs to the destination.

The reference accounting document is the customs declaration (Art. 25), which must be recorded in the VAT registers.

No VAT is due if the goods would be exempt if traded within Italy.

5.2. Non-Taxable Transactions (Art. 8, DPR 633/72)

Non-taxable transactions include:

• Direct and indirect exports: physical transfer of goods from Italy to a non-EU country within 90 days.
• Sales to habitual exporters: entities frequently engaged in exports, allowed to purchase goods and services VAT-free upon submitting a declaration of intent.
• Transactions assimilated to exports: supplies of ships, aircraft and goods for international transport companies.
• Services connected with exports: international transport, leasing, intermediation and customs operations.

6. Proof of Export

VAT exemption for exports requires proof that the goods have left EU territory.

Acceptable documentation includes:

• Customs exit document (DAE/DAU) stamped.
• Transport documentation (CMR, bill of lading, AWB) stamped by customs.
• Other acceptable evidence as per Ministerial Circular No. 35/1997.

7. Obligations and Identification of Non-Resident Entities

Non-resident entities carrying out operations in Italy may:

• Register directly for VAT purposes, or
• Appoint a fiscal representative resident in Italy, who assumes VAT obligations on behalf of the foreign entity.

Operational Summary