VAT Exemption Also Applies During Liquidation

• The Italian Supreme Court held that VAT exemption can still apply during a company’s liquidation phase if the legal conditions are met.
• Because exempt operations remain exempt in liquidation, VAT on related goods/services is generally non-deductible under Article 19(2) of DPR 633/72.
• In the case discussed, legal services used for civil and tax disputes were tied to exempt activity, so the VAT paid on them could not be deducted.
• The Court confirmed that whether an acquisition is linked to exempt or taxable activity is a factual question based on the direct functional link between input and output transactions.
• If a liquidating company carries out taxable operations, VAT deduction may still be allowed for purchases directly connected to the liquidation activity.

Source: eutekne.info

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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