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Italy Extends Input VAT Deduction Deadline Under Enacted Tax Reform Corrections

4 weeks ago
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Italy’s Extended Input VAT Deduction Period Applies from 1 January 2027

 

Summary

  • Italy has enacted Legislative Decree No. 148 of 7 August 2026, a broad corrective package covering VAT, excise duties, income taxes and tax administration. Published in Official Gazette No. 185 on 11 August 2026, the decree entered into force on 12 August 2026. [normattiva.it], [gazzettaufficiale.it]
  • The principal VAT change extends the period for claiming input VAT until the deadline for filing the annual VAT return for the second year following the year in which the deduction right arose. The measure gives businesses significantly more time to identify, validate, record and recover deductible VAT.
  • Businesses with Italian VAT registrations should review invoice-processing deadlines, late-invoice procedures and historic unclaimed input VAT. Although the extension reduces the risk of losing deductions solely because of timing, taxpayers must still satisfy the substantive conditions for recovery and retain adequate evidence supporting entitlement to deduct.

Article

Italy has enacted a further set of supplementary and corrective measures under its continuing tax reform programme. Legislative Decree No. 148 of 7 August 2026 was published in the Italian Official Gazette on 11 August 2026 and entered into force on 12 August 2026. The decree covers several areas of taxation, including VAT, excise duties, international taxation, tax audits, cooperative compliance and administrative simplification. [normattiva.it], [gazzettaufficiale.it]
For businesses, the most significant indirect-tax measure is the extension of the deadline for exercising the right to deduct input VAT. Under the new rule, the deduction may be exercised up to the deadline for filing the annual VAT return for the second year following the year in which the right arose. This is a substantial relaxation compared with the previous general timing rule, under which the deduction normally had to be claimed by the deadline for the annual VAT return relating to the year in which the right arose.
The extended period should provide additional protection where purchase invoices are received, identified or processed late. It may also assist businesses dealing with lengthy invoice-validation procedures, decentralised accounts-payable functions, disputed invoices or delayed corrections to accounting data. Earlier commentary on the draft illustrated that VAT relating to a 2026 invoice could potentially remain deductible through the filing deadline in 2029, rather than the filing deadline in 2027, subject to the final statutory conditions. [taxathand.com]
The amendment should not, however, be viewed as a general relaxation of all VAT recovery requirements. The business must still have a valid substantive entitlement to deduct, use the relevant goods or services for qualifying activities and hold the documentation required under Italian VAT law. Restrictions relating to exempt activities, non-business use or specifically blocked expenditure also continue to apply.
Businesses should update their Italian VAT compliance calendars and determine how the new period interacts with invoice-booking controls, annual VAT return preparation and correction procedures. It would also be prudent to review historical unrecovered VAT that may still fall within the extended window. Any retrospective claims should be supported by a documented assessment of the applicable tax period and evidence establishing when the deduction right arose.
The decree also contains provisions concerning excise duties and the Italian Customs and Monopolies Agency, although the published summary does not identify a comparably significant general customs change. Companies should therefore assess the measure by tax stream rather than assume that every provision applies across VAT, excise and customs operations.

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Italy Extends the Time Limit for Input VAT Deduction

 

Summary

  • Italy enacted Legislative Decree No. 148 of 7 August 2026, published in Official Gazette No. 185 on 11 August 2026 and effective from 12 August 2026. The decree includes substantial amendments to Italy’s input VAT deduction and purchase-invoice recording rules. [normattiva.it], [gazzettaufficiale.it]
  • Taxpayers may exercise the right to deduct input VAT until the filing deadline for the annual VAT return for the second year following the year in which the deduction right arose. Purchase invoices may be recorded within the same extended period while remaining attributable to the year of receipt.
  • According to the IBFD report received on 18 August, the extended rules apply from 1 January 2027. Businesses should reassess late-invoice procedures, historic unclaimed VAT and the interaction between invoice receipt, invoice recording and annual VAT-return deadlines.

Extended article

Italy has substantially extended the period available for exercising the right to deduct input VAT.

Legislative Decree No. 148/2026, known as the Omnibus Decree, was published in the Italian Official Gazette on 11 August 2026 and entered into force on 12 August 2026. Article 12 amends the Italian VAT deduction and purchase-invoice recording rules.

Under the previous general rule, a taxpayer normally had to exercise its deduction right by the deadline for filing the VAT return relating to the year in which the right arose. The shorter period created difficulties where invoices were identified, approved or recorded late.

Under the amended rule, input VAT may be deducted until the filing deadline for the annual VAT return for the second year following the year in which the right arose. The associated purchase invoice may also be recorded within that extended period.

The extension addresses the practical problem of “forgotten invoices,” but it does not remove the substantive conditions governing VAT recovery. The VAT must have become chargeable, the purchase must support activities carrying a deduction right, and the taxpayer must possess an appropriate invoice.

The IBFD report states that the new rules apply from 1 January 2027. Businesses should therefore determine which invoices and deduction rights fall within the revised temporal scope before changing their procedures.

The development should also be monitored alongside the pending EU proceedings concerning the treatment of invoices received in a year following the transaction year.

External sources: Official text of Legislative Decree No. 148/2026 and Italy extends input VAT deduction deadline. [normattiva.it], [vatupdate.com]

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