Brussels Signals “Last Extension”: Italy’s VAT Split Payment Set to Run Until June 2029

Italy’s long-running VAT split-payment regime is set for another lease of life. The Council of the European Union has published a proposed Implementing Decision — stemming from Commission proposal COM(2026) 281 of 17 June 2026 — amending Implementing Decision (EU) 2017/784 to authorise Italy to keep applying the mechanism until 30 June 2029. The decision applies with effect from 1 July 2026, ensuring no gap when the current authorisation (Decision (EU) 2023/1552) expired on 30 June 2026. [blog.pwc-tls.it], [studiopizzano.it]

Under the mechanism — a derogation from Articles 206 and 226 of the VAT Directive (2006/112) — VAT on in-scope supplies is paid directly by the recipient into a dedicated account accessible to the Italian tax authorities, so the supplier receives only the net amount. Scope remains confined to public authorities and certain publicly controlled companies, following the exclusion of FTSE MIB-listed companies from 1 July 2025. [italytelegraph.com], [studiopizzano.it]

The Council frames split payment as an important part of Italy’s anti-fraud strategy, acting as an ex ante safeguard that complements mandatory e-invoicing as an ex post control — together enabling cross-checking of declared transactions and preventing VAT from being withheld by fraudulent or insolvent suppliers. To justify continued necessity, Italy must submit a report by 30 September 2027 evaluating effectiveness, average VAT-refund processing times, and the full list of anti-fraud measures with their entry-into-force dates. [studiopizzano.it]

The Council concluded the measure is proportionate, limited in duration, confined to high-risk sectors, and will not adversely affect final-consumption VAT revenues or the EU’s own resources. Notably, Rome had requested extension to 31 December 2029, but Brussels granted six months less, signalling this should be the last derogation as Italy leans on digital controls. Further analysis is available via PwC Italy and Studio Pizzano. [blog.pwc-tls.it], [studiopizzano.it]