Prepared by Alessia Zanatto, Andrea Werner Beilin, Anna Rossodivita and Francesco Maria Mariani
The Law Decree no. 73/2022 headed “Urgent measures regarding tax simplifications and the issue of work permit, State Treasury and further financial and social provisions” (the “Decree”) was published on 21 June 2022 on the Official Gazette.
With the above-mentioned Decree, the Legislator intended, inter alia, to issue provisions for simplification in tax matters, in order to ensure a reduction in administrative fulfillments for citizens and companies.
Below a brief summary of the main news of the Decree regarding VAT and stamp duty.
Changes to the certain tax deadlines (article 3)
Communication of the VAT settlements re the second quarter
Article 3 of the Decree postponed to September 30, (before it was September 16) the deadline for the timely submission to the Italian tax authorities of the Communication of the VAT settlements re the second quarter (according to article 21-bis, paragraph 1, Legislative Decree no. 78/2010).
EC-listing forms (so called “Intrastat” forms)
Article 3 of the Decree postponed to the last day of the month following the one to which the form is referred (before, the twenty-fifth day of the month following the one to which the form is referred), the deadline for the timely submission to the Italian Customs Agency of the EC-listings form (so-called “Intrastat” forms) according to article 50, paragraph 6, Law Decree no. 331/1993.
Extension to December 31, 2026 of the application of the reverse charge mechanism for certain sales of goods and provision of services carried out in Italy towards taxable persons in Italy (article 22)
Article 22 of the Decree extended to December 31, 2026 (before it was June 30, 2022) the deadline for the application of the reverse-charge mechanism to certain supplies of goods and provisions of services carried out for VAT purposes in Italy.
As known, the aforementioned mechanism provides that it is the recipient of goods and/or services, if it is a taxable person in the territory of the State, the subject who is obliged to account for VAT, in place of the supplier/provider.
The Decree, by amending art. 17, paragraph 8, Presidential Decree no. 633/1972, implemented the Council directive no. 2022/890 in Italy.
Via the mentioned directive, it has been extended to December 31, 2026 the application period of the optional reverse charge mechanism in relation to supplies of certain goods and services[1] susceptible to fraud.
Below the detail of the sales of goods and provision of services pursuant to art. 17, paragraph 6, Presidential Decree no. 633/1972 for which the extension of the application of the reverse charge mechanism till December 31, 2026:
- the supply of terminal equipment for public land mobile telecommunications services subject to tax on Government concessions referred to in article 21 of the tariff annexed to Presidential Decree no. 641 of 26 October 1972, as substituted recently, by Decree of the Minister of Finance of 28 December 1995, published in the Official Gazette no. 303 of 30 December 1995 (i.e. sales of mobile phones occured in the distribution phase preceding the retail trade, as clarified, inter alia, by the Italian tax authorities’ Circular Letter no. 59/ E/2010) (article 17, paragraph 6, let. b), Presidential Decree no. 633/1972);
- the supply of game consoles, tablet PCs and laptops, as well as the supply of integrated circuit devices, such as microprocessors and central processing units carried out before their installation in end-user products (article 17, paragraph 6, let. c), Presidential Decree no. 633/1972);
- transfers of greenhouse gas emission allowances as defined in Article 3 of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003, as amended, transferable in accordance with Article 12 of the same Directive 2003/87/EC, as amended (article 17, paragraph 6, let. d-bis), Presidential Decree no. 633/1972);
- transfers of other units which may be used by operators to comply with the aforementioned Directive 2003/87/EC and of certificates relating to gas and electricity (article 17, paragraph 6, let. d-ter), Presidential Decree no. 633/1972);
- sales of gas and electricity to a taxable dealer in accordance with Article 7-bis, paragraph 3, letter a), Presidential Decree no. 633/1972 (article 17, paragraph 6, let. d-quater), Presidential Decree no. 633/1972).
For the sake of completeness, the reverse charge mechanism continues to apply to those sales of goods and provisions of services carried out in the territory of the State for which the time limitation referred to in the article17, paragraph 8, Presidential Decree no. 633/1972 is not envisaged (e.g. provision of building cleaning services pursuant to article 17, paragraph 6, let. a-ter), Presidential Decree no. 633/1972; taxable supplies of investment gold pursuant to art. 17, paragraph 5, Presidential Decree no. 633/1972).
Amendments to the VAT treatment of services rendered to inpatients and to those accompanying inpatients (article 18)
VAT exemption
Article 18 of Decree rewrites article 10, paragraph 1, no. 18), Presidential Decree no. 633/1972 on VAT exemption for medical services of diagnosis, treatment and rehabilitation rendered to the person in the exercise of supervised health professions.
In detail, the Decree broadened the scope of application of the VAT exemption to the aforementioned health care services of diagnosis and treatment rendered to the person in the exercise of health professions subject to supervision even when the same constitute “a component of a hospitalization and treatment service rendered to the hospitalized person by a person other than those referred to in number 19), when such person in turn purchases the aforementioned health care service from a third party and for the purchase the VAT exemption applies […]; in such case, the exemption shall operate for the hospitalization and treatment service up to the amount of the consideration owed by such person to the third party“.
With the legislative amendment carried out by the Decree to the above-mentioned no. 18) (whose compatibility with the EU Directive should be assessed at EU level), it is possible:
- to “unbundle” from the “hospitalization and treatment” service rendered by the “non-contracted” facility (in the past, from a general point of view, fully taxable[2], except for specific cases[3]) the component referable to the healthcare service acquired from a third party (i.e. a “professional” who meets the requirements of article 10, paragraph 1, no. 18), Presidential Decree no. 633/1972);
- to treat it as VAT exempt.
For example, this is the case in which the patient goes to a “non-contracted” clinic, where he is hospitalized for the purpose of receiving medical service by a doctor, who works within the facility as a freelancer.
In the light of the above-mentioned legislative amendment:
- as done prior to the amendment under discussion, the physician invoices his health care service under VAT exemption pursuant to article 10(1)(18), Presidential Decree no. 633/1972 to the said non-contracted clinic;
- the non-contracted clinic issues an invoice to the patient:
- with respect to the consideration for the health care service by the professional, under the VAT exemption regime pursuant to article 10, paragraph 1, no. 18), Presidential Decree no. 633/1972;
- for the remaining part, taxable.
Reduced VAT rate of 10%
Article 18 of the Decree replaces point no. 120) of Table A, Part III, annexed to Presidential Decree no. 633/1972, which provides for the application of the reduced VAT rate of 10%.
In the detail, the Decree now provides for the application of the 10 percent VAT rate also to:
- hospitalization and care services, including services of increased hotel comfort, other than those VAT exempt under article 10, paragraph no. 1, no. 18)[4] and number 19)[5];
- accommodation services rendered to companions of persons hospitalized by the persons referred to in article 10, first paragraph, number 19[6]), and by non-contracted nursing homes;
- services of increased hotel comfort rendered to persons hospitalized by the subjects referred to in article 10, first paragraph, number 19)[7].
Repeal of the rules on “dummy” companies for so-called “systematic loss-making companies” – VAT profiles (article 9)
Article 9, paragraph 1 of the Decree repealed the discipline of so-called “companies with systematic losses”, included in paragraphs 36-decies, 36-undecies and 36-duodecies of the Law Decree no. 138/2011 “as from the tax period in progress on 31 December 2022”.
As known, the above-mentioned repealed provisions provided that the rules provided for the so called “dummy companies” under article 30, paragraph 1 of Law no. 724/1994 also applied to the so-called “companies with systematic losses”, and therefore also to:
(i) companies/entities that submit CIT tax returns with a loss as outcome for five consecutive tax years;
(ii) companies/entities that, during the above-mentioned time period (i.e., the so-called “five-years observation period”), submit four tax tax returns with a loss as outcome and in one tax period have communicated an amount of income lower than the so-called “minimum” one, pursuant to article 30, paragraph 3 of Law no. 724/1994.
In both cases referred to in points (i) and (ii) above, the companies/entities were considered as “dummy” entities as from the subsequent sixth tax period for the purposes and to the effects of the above-mentioned article 30, Law Decree no 724/1994.
Insofar as it is of interest here, the above-mentioned repeal has significant VAT implications.
In fact, the repealed rule provided that the limitations on the use of the VAT credit provided for by article 30, paragraph 4 of Law Decree no. 724/1994[8] for the above-mentioned “dummy” companies also applies to such “systematic loss-making” companies. In particular, these limitations are as follows:
- inhibition to the refund of the VAT credit, to the offsetting of the VAT credit with different taxes (pursuant to article 17, Legislative Decree no. 241/1997), to the assignment of the VAT credit to third parties (pursuant to article 5, paragraph 4-ter, Legislative Decree no. 70/1998);
- inhibition of the deduction of the VAT credit in VAT settlements in the further hypothesis that for three consecutive tax periods the “dummy”’ company or entity has not carried out transactions relevant for VAT purpose for an amount not less than the amount of the minimum presumed revenues referred to in Article 30, paragraph 1, of Law Decree no. 724/1997.
The repeal takes effect “as from the tax period in progress on 31 December 2022”.
On this point, it has been raised that this provision is not entirely clear, i.e. there is a doubt as to whether the aforementioned repeal rule is applicable:
(i) already to companies that in the five-year period 2017 – 2021 were considered as “systematic loss-making companies”; or
(ii) only as of 2023, with the consequence that the “old” rule would also apply to companies that, as of December 31, 2022, met the requirements to be considered “systematic loss-making companies”.
Clarification on the above is attended.
News regarding the stamp duty related to electronic invoices (Article 3)
With regard to the news concerning stamp duty on electronic invoices, Article 3, Decree, amended Article 17, paragraph 1-bis, letters a) and b), Law Decree 124/2019, providing that, for e-invoices issued starting from 1 January 2023, the threshold provided for the deferment of the payment of stamp duty for the first two quarters of the year is raised from € 250 to € 5,000.
In other words:
- if the amount related to the stamp duty of electronic invoices issued in the first quarter does not exceed € 5,000, it can be paid within the deadline for the payment of the second quarter (i.e. 30 September);
- if the amount relating to stamp duty on electronic invoices issued in the first and second quarters does not exceed, in total, € 5,000, it may be paid by the deadline for payment of the third quarter (i.e. 30 November).
News concerning the cross-border communication (Articles 12 and 13)
Articles 12 and 13, Decree, introduce news concerning the new obligation, that will be in place from July 2022, related to the communication of the data of the transactions carried out with non-resident counterparts through the Interchange Data System (‘SdI’).
In particular, Article 12 introduces a threshold within which it is not mandatory to report purchases that are out of scope of Italian VAT, according to Articles 7 to 7-octies, Presidential Decree No. 633/1972. In particular, such transactions, if below €5,000, can be excluded from the submission to the SdI.
On the other hand, purchases outside the scope of VAT referred to in Articles 7 to 7-octies, Presidential Decree 633/1972 that exceed the threshold of €5,000, must be sent to the SdI, with the document type TD17 (for services) or TD19 (for goods) and nature code N2.2 (ref. Italian tax Authorities’ “Guida alla compilazione della fatturazione elettronica e dell’esterometro”).
Finally, Article 13, Decree, specifies that the penalty referred to in Article 11, paragraph 2-quater, Legislative Decree 471/1997, related to the omitted or incorrect transmission of cross-border invoices to SdI apply to the transactions carried out from 1 July 2022. This penalty is € 2 for each incorrect or omitted invoice, up to a maximum of € 400 per month. In addition, this penalty is reduced down by half, up to a maximum of € 200 per month, if the correct transmission is made within fifteen days after the due date.
[1] As provided for by art. 199-bis, paragraph 1), directive no. 2006/112/EC.
[2] e.g., Ris. no. 87/2020.
[3] e.g. Ris. no. 405/1994 and no. 550979/1989.
[4] According to which “Are VAT exempt: […] 18) the health care services of diagnosis, treatment and rehabilitation provided in the exercise of health professions and health trade subject to supervision pursuant to Article 99 of the Consolidation Act of Health Laws, approved by Royal Decree no. 1265 of 27 July 1934, and subsequent amendments, or specified by Decree of the Minister of Health, in concert with the Minister of Finance.The VAT exemption is applied also to the health care service if it is a component of a hospitalization and treatment service rendered to the hospitalized person by a person other than those referred to in number 19), when such person in turn purchases the aforementioned health care service from a third party and for the purchase the exemption referred to in this number applies; in such case, the exemption shall apply for the hospitalization and treatment service up to the amount of the consideration due by such person to the third party”.
[5] According to which “Are VAT exempt: […] 19) the hospitalization and treatment services rendered by hospital institutions or affiliated clinics and nursing homes as well as by mutual aid societies with legal personality and Third Sector entities of a non-commercial nature, including the administration of medicines, medical aids and board, as well as treatment services rendered by spas“.
[6] According to which “Are VAT exempt: […] 19) the hospitalization and treatment services rendered by hospital institutions or affiliated clinics and nursing homes as well as by mutual aid societies with legal personality and Third Sector entities of a non-commercial nature, including the administration of medicines, medical aids and board, as well as treatment services rendered by spas“.
[7] According to which “Are VAT exempt: […] 19) the hospitalization and treatment services rendered by hospital institutions or affiliated clinics and nursing homes as well as by mutual aid societies with legal personality and Third Sector entities of a non-commercial nature, including the administration of medicines, medical aids and board, as well as treatment services rendered by spas“.
[8] It should be noted that the Italian Supreme Court, with the recent Interlocutory Ordinance no. 16091/2022, referred to the EU Court of Justice the preliminary question regarding the compatibility of the limitations to the exercise of the right to VAT deduction or to ask VAT for refund pursuant to art. 30, paragraph 4, Law no. 724/1994 with the European legislation.
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