Are transactive agreements exempt from the annual limit for issuing VAT credit notes in Italy?

• The Italian tax agency, Agenzia delle Entrate, has clarified that in the case of a renegotiated contract, the client can only deduct the VAT resulting from the renegotiation agreement.
• The supplier, however, cannot correct the invoices issued with a variation note after one year from the execution of the service.
• This means that the supplier would have to pay the full VAT amount to the tax authorities and then request a refund for the incorrectly invoiced VAT, which puts them at a competitive and economic disadvantage.
• The AIDC behavior rule n. 222/2023 allows the supplier to correct the incorrectly invoiced VAT through a credit note, even beyond one year, aligning the VAT due with the VAT deducted by the client.
• This solution is in line with the principles of effectiveness, neutrality, and proportionality.

Source: ipsoa.it

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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