Generic Service Descriptions May Shift the Burden of Proving Input VAT Deductibility

Summary

The Italian Supreme Court reportedly held in Order No. 12624 of 5 May 2026 that an invoice containing only a generic description of services may not provide sufficient evidence for input VAT deduction. The invoice must enable the tax authorities to identify the nature and extent of the underlying supply.
A formally deficient invoice does not automatically eliminate the right to deduct where the substantive VAT conditions are satisfied. However, the recipient may have to provide engagement letters, deliverables, correspondence, payment records or other supporting documentation demonstrating that the services were genuinely supplied to, and used by, the taxable person.
Businesses should review invoice-description standards for legal, consulting, management and other intangible services. References such as “professional services” or “advance payment for advice” may create audit exposure unless they are supported by accessible documentation connecting the invoice, contractual engagement, work performed and relevant recipient entity.

Article

The Italian Supreme Court, in Order No. 12624 of 5 May 2026, has reportedly clarified the evidential consequences of invoices that describe services only in generic terms. The dispute concerned input VAT deducted by a real estate company on legal-service invoices referring to an advance payment for legal advice and to a professional engagement dated 4 October 2010.

The tax authorities challenged the deduction because the invoices did not explain the nature and scope of the services in sufficient detail. The referenced engagement documentation was not initially produced and appeared to concern another company rather than the taxable person claiming the deduction.

The Court’s reasoning reflects article 21 of Presidential Decree No. 633/1972 and article 226 of the EU VAT Directive. These provisions require invoices for services to contain information concerning the nature and extent of the services supplied. The purpose is to allow the tax administration to verify the transaction and the recipient’s entitlement to deduct input VAT.

Consistent with the Court of Justice’s judgment in Barlis 06, Case C-516/14, a deduction should not be refused solely because an invoice contains formal defects if the tax authority has the information needed to verify that the substantive conditions are satisfied. Nevertheless, where the invoice itself does not adequately identify the supply, the taxpayer must provide supplementary evidence.

The practical consequence is an evidential shift. A compliant invoice ordinarily constitutes initial evidence of the transaction. A materially incomplete invoice may lose that evidential strength, leaving the recipient responsible for demonstrating what was supplied, by whom, to which entity and for what business purpose.

Italian businesses should align supplier-onboarding and accounts-payable controls with this approach. Service invoices should identify the engagement, service period and nature of the work, while contracts, work products, correspondence and allocation records should be retained. This is particularly important for group structures where the contracting entity and invoiced entity may differ.

Source Links