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Tax Pills

  • Italy will fully enact prepopulated VAT returns by January 2023


    The Italian government has launched an ambitious new VAT collection program, under which the Revenue Agency will pre-fill VAT returns on behalf of taxpayers. This program aims to simplify the reporting and procedures of VAT documents and, at the same time, improve tax compliance. This is because pre-filled VAT forms could both simplify VAT collection for tax authorities and sharpen the ability of businesses to comply with tax duties.

    Timing of the precompiled VAT and how it works - In short, the legislation provides that data collected from transactional information supplied from electronic invoices via SDI, cross-border transactions, as well as data gleaned on fees electronically, will be used by the Revenue Agency to pre-populate a VAT return to be later submitted by the taxpayer. For now, this program applies only to businesses, professionals and self-employed workers resident and established in Italy. Indeed, the pre-populated forms will be regarded as drafts, with taxpayers having eventually an opportunity to amend incorrect data. Regarding the timing, recently the so-called "Support" Decree, which came into force on 23 march 2021, in consideration of the difficulties in adapting the IT procedures related to electronic invoicing, has intervened once again on the prepopulated Vat, providing for a further postponement of its experimental launch. Below are the two new starting dates: the preparation of the draft VAT registers and the communications of periodic settlements (Lipe models) has been postponed to the operations carried out starting from 1 July 2021, no longer from 1 January 2021, while the draft of the annual VAT return will be made available to taxpayers starting from the operations carried out from 1 January 2022, no longer from 1 January 2021. The latter date therefore concerns the returns that must be submitted by 2023. Therefore, in summary, the process of simplifying a vast range of tax obligations linked to pre-filled VAT with respect to VAT ledgers pursuant to art. 23 and 25 of the Italian VAT Decree, quarterly communication of VAT calculation and annual VAT return will all begin for transactions carried out as of 1 January 2022.

    The central role of the Revenue Agency in managing the new prepopulated VAT return - In detail, the Italian tax authorities, Agenzia delle Entrate, will create VAT ledgers and draft quarterly VAT returns, till to encompass also annual return, for Italian resident entities only. Particularly, for the preparation of these Vat reports, the Agency will be allow to use transactions and data processed through the SdI e-invoicing system, communications of cross-border transactions and daily online cash till reports and also the fiscal data present in the “Anagrafe Tributiaria” or tax register , such as, for example, those of the VAT return of the previous year and of the communications of the periodic payments of the previous quarters. However, businesses will be able to review and amend the fiscal returns before approval. While, ad regard to non-resident Italian VAT-registered businesses, they will still be obliged to complete and submit their VAT returns as currently. Furthermore, with regard to the possibility provided for the VAT operator to use pre-filled VAT documents through professional intermediaries, the latter must have acquired the authorization to use the services of electronic invoicing.

    More automation, easier fulfillment of tax obligations - The start of the experimentation of the pre-filled Vat model and the related application methods will involve millions of taxpayers. It will mark a further step forward in the process of simplifying the tax system, centered on a renewed relationship between taxpayers and tax authorities, increasingly oriented towards dialogue and exchange, mutual and recognized reliability. A process that will see involved the Revenue Agency in providing a constant online assistance program to all VAT taxpayers, resident and established in Italy, using a special “dedicated" area of the website of the Agency itself, in which the draft documents already partially pre-filled with the data of the transactions acquired with electronic invoices, with the communications of cross-border transactions and with the data of the payments acquired electronically will be available.

    If Taxation also Looks to the Future by Using Third Party Information Reports to Assist Taxpayers Meet their Return Filing Obligations - All revenue bodies are confronted with the goals of making it easier for taxpayers to comply with law (i.e., reducing their compliance burden), improving taxpayers’ compliance and increasing administrative efficiency. This is particularly true as far as the Value Added Tax is concerned, due to its basic complexity. Anyway, during the last decade, the use of pre-filled tax documents as a strategic resource to maximize national tax compliance levels has been a distinct feature in several Countries. But what does this step imply? Shortly, with the adoption of the pre-populated returns, the revenue body itself, rather than the taxpayer, becomes the originator of tax returns for a majority of taxpayer population, using a large range of third-party information sources and other information held by it relevant to each taxpayer’s tax affairs. In countries, like Italy, where these arrangements have been established on a comprehensive basis, pre-populated returns are sent to taxpayers in either paper form or electronically for their confirmation, or if necessary, to obtain any additional information required to enable a final assessment to be made. Well, in this context, Italy has decided to take a further step forward, adding the pre-filled VAT return to the pre-filled income tax. The goal is clear: to maximize tax compliance with regard to a tax, such as VAT, traditionally elusive to the tax authorities.

    Stefano Latini

  • “Support Decree”, ready the Revenue’s kit for the new non-repayable contributions. Applications will start on March 30th

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    Form and instructions for requesting the new non-refundable grant introduced by the “Support Decree”, approved recently by the Government, are already accessible online on the Italian Revenue Agency official website, Indeed, today's Provision signed by the Director of the Revenue Agency, Ernesto Maria Ruffini, following the provisions of the Law Decree, fixes the rules for requesting and obtaining the new non-repayable contribution in favor of companies, VAT taxpayers and self-employed affected by economic consequences of the epidemiological emergency. In addition, the Agency has also published online a new guide that explains in simple words all the details of the new measure, from the interested entities and individuals to the methods of calculating the grant, including indications for requesting it.

    How and when to apply for the contribution
    The procedure is rather simple. Starting from March 30th and until May 28th, requests must be sent to the Revenue Agency, also using an intermediary, through the Agency's internet channels. Particularly, taxpayers can use two options: those who already use the telematic Desktop can prepare the instances through the software and transmit them through the Entratel channel; in alternative, taxpayers can use the web-service platform available in the reserved area of the portal "e-Invoices and Fees" of the website. Once sent the application and received a confirmation, the new grant will arrive directly on the current account indicated in the request or, at the choice of the taxpayer, the amount due can also be used as a tax credit in compensation. There are two requirements to access the support: having achieved revenues or remuneration not exceeding 10 million euros in 2019 and having recorded an average monthly decrease in turnover and fees in 2020 compared to 2019 of at least 30%.

    Who is entitled to the contribution and who is not
    As explained in the Revenue’s Guide, the new non-repayable grant is subject to two specific conditions: the first consists in having achieved in 2019 revenues or remuneration not exceeding 10 million euros. The second requirement to be met is that the average monthly amount of turnover and fees for the year 2020 is at least 30% lower than the average monthly amount of sales and fees for 2019. Furthermore, it can be requested only by taxpayers carrying out business, art, professions and by holders of VAT, who resides and/or are established in the State Territory. In addition, the contribution is also due to non-commercial entities, including third sector entities and recognized religious entities, in relation to their commercial activities. On the other hand, taxpayers whose activity has ceased on the date of entry into force of the Decree or who have subsequently activated the VAT number, public bodies (Article 74 of the TUIR), financial intermediaries and holding companies are all excluded from the benefit.

    How to calculate the grant?
    As described by the Guide, the amount of the contribution is determined by applying an adjustable percentage, 60%, 50%, 40%, 30% and 20%, depending on six different increasing thresholds of applicant 2019 turnover and/or remuneration, to the difference between the average monthly amount of turnover and fees for 2020 and the average monthly amount of turnover and fees for 2019.
    However, according to EU limit-conditions, the amount of the recognized contribution cannot in any case exceed € 150,000.

    Stefano Latini