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Italy Clarifies Application of Reverse Charge for Cross-Border B2B Supplies

The Italian Revenue Agency (IRA) has published Ruling No. 549 of 19 August 2021, which clarifies the application of the reverse charge mechanism for VAT on cross-border B2B supplies.

The background of this ruling is a situation where a Slovakian company, registered for VAT in Italy, supplied services to an Italian company. In the ruling, the Italian tax authorities declare that the main rule for B2B services applies, and that the Slovakian company does not charge Itailan VAT on the invoices issued to the Italian customer.


Note from the editors: In this case, the services of Slovakian company consisted of the restoration and maintenance of an internal railway located in Italy. The Slovakian company treated these services as relating to immovable property, and thus subject to Italian VAT. The Slovakian company argued that the services (thus) were not cross-border services, but local services in Italy, and because the Slovakian company is registered (as non-resident business) in Italy, it should charge 22% Italiand VAT.

The Ruling clarifies that even though the services attract local VAT, they should not be ‘allocated’ to the Italian VAT registration of the Slovakian company, but be treated under the main rule of article 44 of the EU VAT Directive.

In the past, it was more common that a local VAT registration could ‘attract’ local VAT. This ‘Force d’attraction’, could apply to both sales and services.


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