Venerdì 24 Febbraio 2017 - Aggiornato alle 10:41
The fight against Italy’s Vat evasion is increasingly relying on the split payment mechanism
The 2017-2018 Italy’s fiscal horizon will be marked by the extension and strengthening of the split payment tool
Following the enactment of the '2015 Stability Law', Italy has introduced a specific split-payment mechanism for VAT due on goods and services supplied to the majority of government and public sector bodies.
The “split-payment” fiscal tool, how does it works - The new so-called “split payment” mechanism is in force out from 1 January 2015. It applies only to domestic transactions carried out by suppliers for sales to eligible Italian public administrations.
According to the new provision, while the supplier is still required to issue invoices showing the relevant VAT due, the public administration purchaser is required to pay the VAT directly to the Italian Treasury and not to the supplier. It means that the public administration has effectively to “split” the payment by addressing the Vat sum due to the Treasury and the remaining compensation to the services or goods supplier. In this way, the input Vat is immediately and almost automatically secured from likely tax evasion manoeuvres.
Split-payment and Reverse Charge in tandem to curtail the evasion of Vat - The new mechanism, together with other recent measures expanding the scope of application of the domestic reverse charge, has been introduced to limit VAT evasion and prevent fraudulent tax practices. Put differently, the application of this new payment system has already contributed to reduce the risk of suppliers not paying VAT charged to public administrations because the tax due is transferred directly to the Treasury.
Working in this way, the new system has enabled the Revenue Agency to curb considerably the VAT evasion phenomenon and, at the same time, provide extra-funds to the Italian Treasury.
The Revenue Agency’s instructions on the new payment system – As clarified by the Revenue Agency in two Circulars, documents used to clarify how to apply in practice specific new fiscal rules, the new payment system applies to Italian public administrations as defined in the VAT law, but with additional interpretation (e.g., public universities, public hospitals and social security bodies). In addition, the Agency has clarified that the new payment system applies irrespective of whether the eligible public administration is acting in its commercial or institutional capacity in making the purchase. On the other hand, the split-payment mechanism does not apply to social security bodies that are not of a public nature, nor does it apply to noneconomic public entities.
Finally, the explanatory Circulars has also illustrated that the subjective requirement of the provision is fulfilled by the public nature of the body itself, and not by the type of service offered to it.
Supplies subject to the new payment system and eventual exceptions- The split-payment mechanism generally applies to all taxable supplies of goods and services supplied to eligible public administrations. However, specific exceptions apply, such as: transactions where the public administration is not liable for the payment of VAT (e.g., VAT-exempt supplies, supplies outside of the scope of VAT and supplies certified by a ticket or a simple receipt); supplies subject to the reverse-charge mechanism; supplies of professional services (e.g., services rendered by lawyers and engineers).
The Revenue Agency and Ministry of Economy and Finance take stock of 2016
Third consecutive record year for the Italian Revenue Agency, with 19 billion reported in the State coffers in 2016. It is the highest amount ever collected by the Tax Administration, thanks to targeted tax assessment activities and to a new strategy aimed at increasing the implementation of spontaneous tax obligations. In fact, about 500 million euro come from the promotion of preventive dialogue with citizens, aimed at giving taxpayers the opportunity to correct the mistakes in time, and thus to pay reduced penalties, avoiding future tax assessments.
Good news also in terms of tax refunds: in 2016 the offices of the Revenue Agency delivered 2 million and 740 thousand tax refunds to business and families, for a total amount of 14 billion euro.
Meanwhile, it is growing the use of online services, with over 6 million registered users, and the number of prefilled annual tax returns handled independently by the citizens, with 2.1 million returns sent via web by taxpayers.
These are just some of the results, achieved by the Italian Revenue Agency, presented on 9th February 2017 by the Director, Rossella Orlandi, during a press conference at the Ministry of Economy and Finance, with the presence of the Minister, Pier Carlo Padoan, the Deputy Minister, Luigi Casero, and representatives of tax authorities.
Recovered 19 billion euro from the fight against tax evasion - After the success of the previous two years (14.2 billion euro in 2014 and 14.9 billion euro in 2015), 2016 confirms the positive trend in terms of amounts collected, thanks to a targeted fight against tax evasion with more than 19 billion euro recovered (+ 28%). Of these, 4.1 billion are attributable to the “voluntary disclosure” procedure. A result that goes beyond expectations, thanks to painstaking assessment activities carried out by the tax officials on more than 129 thousand applications. The Revenue Agency has focused its assessment activities on large taxpayers, with a percentage of controls of 40.3%, followed by medium-sized enterprises, with 15.3% and small businesses and self-employed with 1.4%. About individuals, tax investigations were carried out in relation to more than 280 thousand taxpayers.
A 2016 of innovation and efficiency for taxpayers – The prefilled annual tax return is more and more appreciated by taxpayers that, in 2016, sent 2.1 million returns directly online, an increase of 50% compared to 2015. A success reached also thanks to the new data made available by the Revenue Agency, such as health expenditures and other deductible expenses. The Tax Administration has also been engaged in increasing the dialogue with taxpayers, providing over 13 million services: over 10 million directly at the local offices and more than two million by phone.
994mila queries were managed by Civis, the online service to help taxpayers with the irregularity communications. Using online channels was also crucial to streamline bureaucratic procedures: last year, for example, over 1 million of leases registrations, the
61% of the total, were carried out electronically (they were 11% in 2010).
Furthermore, the Revenue Agency was also involved in other processes of innovation in Public Administration, such as electronic invoicing. Since the service started, in June 2014, the invoices exchanged electronically with Public Administrations have reached 56 million.
Finally, good news also regarding the brand new “Advance tax ruling on new investments”, that enables resident and non-resident investors, going to realize long-lasting and relevant investments within the Italian territory, to obtain the preventive opinion from the Italian Revenue Agency about the tax treatment applicable to business plans and related extraordinary operations. In 2016, 16 investors presented the investment plan to the Revenue Agency and express interest for the new institute. 6 are the instances already submitted (3 of which related to foreign investors), for a total value of 3.87 billion euro and employment implications for about 75,000 job positions.