Edited by Davide Accorsi and Laura Piranese
In its Resolution No. 450 of October 20, 2023, the Italian tax authorities clarified how to regularize violations related to a taxpayer’s late registration for VAT purposes in Italy in the presence of transactions subject to VAT that were not timely invoiced and declared.
These clarifications were necessary because it is not possible to regularize the omitted annual VAT return and are applicable more generally to any taxpayer, who has failed to file such a return in the presence of incorrectly invoiced sales transactions and related VAT liability.
Responding to the specific questions of the company requesting the ruling reply, which is non-resident in Italy, belatedly identified for VAT purposes through a fiscal representative, the Italian tax authorities clarified that, in order to carry out the self-disclosure procedure (so called “ravvedimento operoso”), the taxable person, for each year subject to regularization and without application of the legal cumulation (so called “cumulo giuridico”), should:
- issue the invoices subject to the regularization (“now for then“);
- record the mentioned invoices in the VAT books;
- report the regularized transactions in the periodic settlement data reports (hereinafter “LiPe”), unless the regularization occurs directly with the annual VAT return or successively of its submission;
- submit the relevant annual VAT return (to be considered formally omitted, unless submitted within 90 days from the original deadline for submission);
- pay any VAT due, plus any interest;
- pay the penalty for the omission of invoicing and registration of taxable transactions, equal to ninety percent of the non-invoiced VAT with a minimum of 500 euros, reduced in accordance with the provisions of Article No. 13, of Legislative Decree 472/1997;
- pay the penalty for omitted LiPe, equal to 500 euros for each omitted communication, reduced according to what is indicated in Article No. 13, of Legislative Decree 472/1997.
- pay the penalty for failure to keep VAT records, amounting to 1,000 euros, reduced according to what is indicated by Article No. 13, of Legislative Decree 472/1997.
In addition, since the company requesting the ruling reply is belatedly registered for VAT purposes in Italy, it is required to pay the penalty for the omitted or inaccurate notification of the start or variation of activity, amounting to 500 euros, reduced according to what is indicated by Article No. 13, of Legislative Decree 472/1997.
The taxable person will then have to wait for any assessment by the Italian tax authorities, which, assuming that the payment of the VAT due has not been made within 90 days of the deadline for submission of the relevant annual return, will apply the penalty for omitted VAT return from 120% to 240% of the VAT due, with a minimum of 250 euros.
The Italian tax authorities also points out that, in such a case, the penalty for failure to pay the VAT due, amounting to 30 percent of the said VAT, is absorbed by the penalty for failure to file the annual VAT return (and, therefore, is not due either at the time of the self-regularization or at the time of the assessment). In addition, the tax authorities, at the time of any assessment, will have to take into account the amounts spontaneously paid during the self-regularization and can apply the legal cumulation and the reduction to half of the minimum provided for in the case of manifest disproportion between the amount of undeclared VAT and the applicable penalty.
Since the company requesting the ruling reply did not propose the question, the Italian tax authorities did not comment on the possible relationship between the self-regularization carried out according to the instructions provided in the ruling reply and the causes of non-punishability of the crime provided for in Article No. 5, Legislative Decree 74/2000.
 On this point, the Italian tax authorities recalls that already in its circular letter No. 42/E of October 12, 2016, it was clarified that a declaration submitted more than 90 days after the submission deadline is to be considered omitted with the consequence that the penalties cannot be spontaneously regularized through the institute of the “ravvedimento operoso”.
 As clarified, among others, by circular letter no. 180 of July 10, 1998, it is not permitted to avail itself of the legal cumulation referred to in Article No. 12 of Legislative Decree 472/1997, in the context of a self-regularization procedure, because the legal cumulation is permitted only to the offices of the financial administration during an audit procedure.
In this regard, the Italian tax authorities points out that the date of issue to be reported on the document is the date of actual issuance (i.e., the date of transmission to the Interchange System, where the taxpayer opts for the issuance of the electronic invoice; considering the company requesting the ruling reply is a non-resident entity, electronic invoicing is not mandatory), while the date of the transaction is the day of the collection of the consideration for the service rendered (i.e., the “invoice date” referred to in the aforementioned electronic invoicing via SdI).
 With reference to the VAT due, responding to a specific question from the company requesting the ruling reply, the Italian tax authorities clarified that the price agreed upon and, in the case at hand, collected for the service rendered (initially not invoiced), should be understood as including the VAT where the transferee/purchaser cannot exercise the relevant deduction, typically where it is a final consumer or a non-resident.
 See Article No. 6, paragraph 1, of Legislative Decree 471/1997.
 At 1/9, 1/8, 1/7, 1/6, or 1/5 of the minimum depending on when the regularization intervenes.
 See Article No. 11, paragraph 2-ter, of Legislative Decree 471/1997.
 See Article No. 9, paragraph 1, of Legislative Decree 471/1997. The ruling reply clarified that, on the understanding that this penalty is to be considered unique for records/documents that are not kept and then retained in compliance with the law, the penalty is applicable for each year in which the relevant violation was committed.
 See Article No. 5, paragraph 1, of Legislative Decree 471/1997. If the omitted declaration is submitted by the deadline for submitting the annual VAT return of the following year and, in any case, before the start of any administrative assessment activity of which the taxpayer has had formal knowledge, the applicable penalty is from 60 percent to 120 percent of the tax due, with a minimum of 200 euros.
 See Article No. 13, of Legislative Decree 471/1997.
 See Article No. 12, Legislative Decree 472/1997.
See Article 7, paragraph 4, Legislative Decree 472/1997.
 See Article 13, paragraph 2, Legislative Decree 74/2000.
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