Deductibility of Non-Deductible Pro Rata VAT: Cash or Accrual Basis for Businesses?

• The deductibility of non-deductible VAT from the general pro rata is debated: should it be treated as a general expense or an accessory cost?
• If considered a general expense, the issue is whether it should be deducted on a cash basis or on an accrual basis.
• The Italian Supreme Court (Cassazione) ruled in sentence no. 20435/2021 that non-deductible VAT from pro rata is a general expense deductible on a cash basis.
• This interpretation impacts how business income is calculated for tax purposes.

Source: commercialistatelematico.com

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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