The document discusses recent reforms to Italy's VAT system, including: - The introduction of quarterly VAT disclosure and the "Spesometro" starting in 2017, replacing annual VAT disclosure. This aims to reduce tax evasion by requiring more frequent reporting of invoices. - Extending the split payment system to more companies from July 2017 onward in an effort to combat VAT fraud. - Reverse charge mechanisms introduced in 2013 and expanded in 2015-2016 to additional service sectors to address collection evasion. - Increased penalties for failing to submit tax disclosures or submitting incomplete or inaccurate information. - A tax credit of €100 for businesses required to do double quarterly reporting, to offset costs

1. ITALIAN VAT SYSTEM
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VAT SYSTEM
Reforming European VAT
• The EU «VAT Gap»
• Action plan by the European Commission in April 2016
• Proposals by the European Commission in December 2016
• Country of destination
• Member States needs
ITALY
*Finance Bill 2017
*Corrective Action dated 24° April 2017
• Extended split payment application
• VAT Allowance
• New terms for registration of invoices
• Changes to compensation
*Three most important IT Government priority interventions
• Mobile phones services to individuals
• VAT fraud/reverse charge
• New VAT collection mechanism for online sales

3. Italian VAT system:
The recent legislative modifications
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VAT Communications and « Spesometro»
2017: deadlines, instructions, how it works
«Spesometro», VAT 2017 quarterly disclosure: how does the new obligation
sending invoices issued and received and periodic payments VAT work?

5. Spesometro 2017 and
VAT 2017 Quarterly disclosure
These are just some innovations contained in the tax decree related to
the new 2017 Budget Law, the text of which has been approved by the
Parliament definitively.
These large, indeed, great news provide, in fact, the introduction of the
new Spesometro 2017 and therefore new requirements for VAT taxable
subjects, in order to reduce the VAT tax evasion in Italy: the quarterly
communication of VAT from 2017, that replaces the old spesometro.
So, let’s see the new VAT quarterly disclosure, the new Spesometro
2017 and what changes from 2017.
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6. • VAT 2017 Quarterly Disclosure: what is it?
The quarterly disclosure of VAT in 2017 is the novelty contained in the tax
decree related to the Budget Law 2017 which provides:
1) the obligation for taxable people to submit the data of invoices issued
or received, not once a year but every three months;
2) the introduction of a new quarterly communication to transmit the
Inland Revenue, the summary data for all periodic payment operations
VAT;
3) that the new rules and obligations take effect from the tax year in
progress at 31st December 2017.
The government's objective, by the introduction of a quarterly analytical
spesometro, is to combat tax evasion great in terms of VAT and thus to
increase the revenue of the State and, on the other side, to provide for
measures such as the tax credit, in favour of taxpayers, which will increase
costs, given the new requirements of the 2 communications for the VAT in
2017.
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7. Spesometro 2017: instructions and how does it work?
The operation of the new analytical spesometro, is explained in the article 4 of the tax decree related to the law of Budget
2017, which specifically provides that, as from the tax year in progress at 31st December 2017, the obligation for taxable VAT
subjects to communicate by the last day of the second month following each quarter, electronically to the revenue Agency:
1) All the data of all invoices issued and received, modified and registered pursuant to Article 25 of Presidential Decree n. 633 of
1972 (VAT law), including the customs declarations;
2) A brief summary of the accounting data of tax clearance operations carried out pursuant to Article 1, paragraphs 1 and 1bis
of Presidential Decree n. 100 of 1998 and Articles 73, first paragraph, letter e), and 74, fourth paragraph, of Presidential
Decree n. 633 of 1972.
In the new arrangement, should then return all VAT transactions carried out by operators active in B2B, regardless of the amounts
or the type of legal entity, except for taxpayers in the minimum regime, who are excluded.
The procedure of electronical submission of the quarterly VAT disclosure, will take place according to the criteria established by
an appropriate measure of the Director of revenue Agency.
The introduction of the new quarterly spesometro 2017, so-called Analytical Quarterly spesometro, therefore, concludes a
process that began with the 2015 Stability Law that, at the time, had introduced the requirement of annual spesometro for all
active and passive invoices.
Now, since 2017, this disclosure became from annual to quarterly and, more, a new communication is compulsory, always
quarterly, for the accounting data summary to the tax periodic payment operations (see about expiration of 2017 VAT quarterly
communication).
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8. What will change with the quarterly submission of
VAT from 2017?
From 1st January 2017, the VAT payers are obliged to transmit electronically, instead of the Annual spesometro 2017,
two new types of communications:
A quarterly disclosure of the data of invoices issued and received, containing the following data:
• Identification of subjects with whom are carried out the operations;
• Date and number of the invoice;
• Tax base;
• Rate applied;
• Tax;
• The type of operation.
A quarterly disclosure of periodic payments of VAT information: all the accounting data summarising the periodic tax
payments, even if on credit. They are excluded from the presentation of this type of communication, individuals not
subject to compulsory VAT Annual declaration annual or exempted from making periodic payments.
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9. VAT Communications and 2017 Spesometro: deadlines
The deadline for VAT Quarterly disclosure on 2017 invoices of VAT Periodic Payments data is not later than the last day of the second month
following each quarter.
Only for the year 2017, the amendment adopted by the Government in November 2016, provided that:
VAT Quarterly disclosure tax bills maturing in 2017 deadline:
1st semester: half-yearly tax bills maturing notified by September 18th , 2017
2nd semester: by the deadline of February 28th , 2018.
From 2018, deadlines spesometro invoices will be May 30, September 16th , November 30 and February next year.
Data communication summary periodic VAT payments maturing in 2017 deadline: it is not later than the last day of the second month
following each quarter, so:
First quarter: by 31st May 2017;
Second quarter: by 18th September 2017;
Third quarter: by 30 November 2017;
Fourth quarter: by the last day of February of the following year, so 28 or 29 February 2018.
VAT Quarterly disclosure and spesometro 2017:
In summary, taxpayers in 2017 must fulfill the following obligations:
Spesometro 2017 years 2016: before 10th April for the monthly taxpayers and April 20 for quarterly taxpayers;
Quarterly report of periodic VAT payments in 2017: by the last day of the second month following each quarter;
VAT Quarterly disclosure tax bills maturing in 2017: first semester sending data by 18th September and the second semester until 28th
February 2018.
Penalties for failure to tax quarterly disclosure, unfaithful or incomplete:
The 2017 penalties for taxpayers who fail, or transmit a trespass or incomplete invoice or some data, are:
Failure or delay in transmission of data related to each invoice: minimum penalty of € 2 per invoice to a maximum of € 1,000 per quarter (*)
Failure, incomplete or inaccurate communication of the periodic payments: minimum sanction € 500 to a maximum of € 2,000 (*).
* The penalty is reduced by half if the transmission is carried out within 15 days after the deadline or if, within the same period, is carried out
the correct data transmission.
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10. Spesometro 2017 and costs of quarterly disclosure
Spesometro 2017 submission costs: as a complete novelty in 2017, the Italian
government has also provided for a tax credit for taxpayers required to double
quarterly disclosure, of € 100 one-off, but only if the turnover does not exceed € 50,000
which corresponds, for the tax authorities, to a cost of € 240 million, to which are also
added € 50, for the taxpayer who opts for the submission of electronic collected prices
2017.
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11. 2016 VAT NEWS
(following to the European position against fraud)
- Split Payment
- Reverse Charge
- VAT deposit
- Intra EU processing
- VAT fraud
- Invoicing requirements in electronic commerce
- Changes in tax penalties
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12. SPLIT PAYMENT
Starting from 1st July 2017 the perimeter of application of the split payment will be extended to other
categories of Companies and entities: all those performing services subject to withholding tax, listed
Companies, Companies directly controlled by the Presidency of the Council of Ministers, Companies
controlled directly by Regions, Provinces, Metropolitan cities, Municipalities.
Certainly the extent of the split payment, although barely approved by the EU, requires constant
monitoring to see if it is really effective to combat fraud or if it produces only the financial impact for
the State and taxpayers. What is certain is that, after a year of operation of the mechanism, the new
institute is fully operating.
The Italian state, anticipating all other EU member States, starting from 1st January 2015 decided to
introduce a new tax collection mechanism for effecting transactions in respect of some public
administrations. The new mechanism is expected that in the presence of the above operations, the tax
payment is carried out directly by the customer or by the public transferee, in place of the supplier,
who, however, remains the tax debtor. The purpose of this system, as evidenced in 2010 by the
European Commission, and as confirmed by Circular 1 / E 2015 of the Revenue, is to be identified in
the will to use the specific collection tool to combat tax evasion and avoidance specifications, and in
particular for bridging the difference between the VAT and the waiting levied (VAT Gap).
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REVERSE CHARGE (starting from 1st January 2013)
In order to counter the so-called collection evasion, both at European and national
level, the Reverse Revenue Mechanism (Reverse Charge) is becoming increasingly
popular.
By 2015, operations mixing up this facility have been considerably increased,
involving services about cleaning, demolition, installation and completion related
to buildings, while the Stability Law for 2016 has involved, under certain
conditions, also the consortia.

14. REVERSE CHARGE
The Community Legislature and, consequently, the Italian national, for reasons mainly
driven by a growing evasion in the VAT sector, introduced mechanisms which identify
the paxpayer’s figure in that of the transferee or the buyer: the tax debtor is
essentially the taxable person who makes a sale of goods or a taxable service, except
in cases where the tax is due by a different person.
The taxpayer in relations with non-residents
- Transferor or provider established in an EU Country: the transferee or buyer fulfills
the obligations of billing and accounting (according to the provisions of Articles 46
and 47 of DL 331/1993) by integrating the invoice
- Transferor or provider established in an Extra EU Country: the transferee or buyer
fulfilles the billing and accounting obligations through self-billing.
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15. REVERSE CHARGE
Taxpayer in 'internal' relations
In 2014, the Italian legislature widened the application of the reverse charge from
the construction sector (both for construction subcontracting and real estate
sales), and to other cases in which this mechanism applies: mobile phone sales,
sales of integrated circuit devices such as microprocessors.
News from 2015
As mentioned, the European Community has allowed Member States to expand
the Reverse Revenue Mechanism as a special measure of the Rapid Reaction
Mechanism - Qrm - and the Italian Government by the Stability Law 2015 has
established that the system of Reverse charge should be applied irrespective of the
subjective qualification of the person who puts them into practice and which must
be applied to the provision of cleaning, demolition, plant installation and
completion services related to buildings. In essence, the new activities which,
since 1st January 2015, are subject to the Reverse Charge mechanism, are related
to the "construction sector".
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16. REVERSE CHARGE
The novelties of the Stability Law for 2016
This Law added that the Reverse Charge mechanism also applies to the
provisions of services made, by the Companies joined into a consortium, to
their consortium which has been awarded a contract against a public body to
which the said consortium should apply the mechanism of split payment.
Self-billing is also valid for imports
The implementation of the VAT through self-billing also applies to Customs,
and the Financial Administration, in case of assessment, cannot ask for
payment of the tax that has already been settled by the Reverse Revenue
Mechanism.
Similarly, penalties must take account of the payment in accordance with the
European criteria of proportionality and adequacy.
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17. VAT DEPOSIT
The novelties of D.L. 193/2016
By the article 4, paragraph 7, D.L. 193/2016, with effect from 1st April 2017, various provisions of Article 50-
bis, D.L. 331/1993 laying down provisions for the taxation of depositories for VAT purposes have been
modified. As a result of these modifications, the opportunities for recourse to the depository are extensively
expanded, also by eliminating the subjective limits on the recipients of the supplies of goods (which may
therefore also be national operators) and the objective ones concerning the categories of goods admitted to
it. The requirement of the necessary physical introduction of the goods into the VAT deposit (which is
indispensable both by the Financial Administration and the Case-Law of the Community) remains evident.
In particular, it is foreseen that the extraction of VAT warehousing assets is carried out without payment of
any tax when performed by regular exporters who make use of the faculty referred to point c) of the first
and second subparagraphs of art. 8, D.P.R. 633/1972. In such cases, the statement of intent must be
transmitted to the Revenue Agency, which issues a specific electronic receipt.
The new provisions of D.L. 193/2016 allow, inter alia, the possibility of extracting, from a VAT depository by
self-billing, goods coming from a third Country and placing in free circulation with an introduction to the
same depository without having to give a specific guarantee. The guarantee waiver is, however, subject to
very precise requirements of reliability laid down in the D.L. mentioned above, which must be attested by a
declaration of substitution of a notary act.
The Circular 12 / E of the Revenue Agency of 2015 also highlighted the accounting requirements that the
extractor from the deposit has to put in place.
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18. INTRA EU PROCESSING
For regulatory transposition (Law 115/2015) are considered intra-Community
processing and do not give rise to supplies / purchases of goods, only shipments of
goods to another Member State subject to substantial transformations in that
State and that at the end of the transformation are in the Member State of
departure.
According to the law, there are workings, such as refinement operations, expert
inquiries and usual manipulations.
This new rule radically changes the duties and procedures of taxpayers who carry
out transformation operations with other Member States.
Refinement operations
These are operations relating to the processing of goods, including their assembly,
their adaptation to other goods; to the transformation of goods; to the repair of
goods, including their development; to the use of certain goods, which are not
found in compensating products, but which allow or facilitate their obtainment
even if they disappear wholly or partially during their use.
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19. INTRA EU PROCESSING
Expertise
The Revenue Agency, with its own Resolution, has made it clear that the
assessments involve limited valuations of the specific asset examined, excluding
any prospective analysis; therefore, according to the Agency, the expertizes are
intended to objectively identify factual elements of a material, movable or
immovable property in relation to value, quality and quantity, even if they take
particular significance scientific knowledges or technical calculations, without any
possibility to extend the same considerations to other elements of the same
species.
Usual manipulations
They consist of operations designed to ensure the preservation of the product, to
improve its presentation or commercial quality or to prepare its distribution or
resale.
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20. VAT FRAUD
The phenomenon of VAT fraud has become worrying for all EU Member States. Nonetheless,
VAT legislation does not allow Member States to limit the right of deduction of an operator
who buys goods or services in good faith from an “non-existent" supplier.
The Court of Justice (C-277/14 of 22 October 2015) and the Court of Cassation (Order 18642 of
22 September 2015) revised essentially the criteria which, in the event of fraud, allow the
Financial Administration to recover the tax by the buyer.
Involvement in VAT fraud
Position of the EU Court "in favor": a taxable subject cannot be involved, in terms of VAT, by
the fact that in the chain of assignments in which he enters his operations, another transaction
preceding or subsequent to that made, is inflicted with fraud on the VAT, without that passive
subject knowing or may knowing it.
Position of the EU Court “not in favor”: a taxable subject who knew or ought to have known
that he was involved by acting in a transaction involving VAT fraud, for the purposes of the
Sixth Directive, should be considered a participant in such a fraud.
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21. VAT FRAUD
Elements to demonstrate diligence and good faith of the subject involved in fraud (Cassation)
Formal requirements of the transferor: they are not relevant as each fraudulent mechanism takes
care, first of all, of exhibiting outside an apparent fairness
Substantial Requirements: effective existence in the transferor of an efficient operating structure;
ability to supply on his own the goods purchased (based on objective elements); they cannot
escape an honest contractor working in a particular business sector; they must not escape an
average-sized entrepreneur.
Court of Justice EU, judgment of 22.10.2015, case C-277/14
It is not, in itself, relevant for the presumption that fraud is known to the transferee: the dilapidated
state of the property in which the transferor's registered office is situated; if the economic activity
consists in the sale of goods carried out under various successive sales; the inability to establish a
contact with the transferor Company or with the person registered in the Register of Companies as
its director; the lack of authorization or license granted by the Administration for the purpose of
carrying on an economic activity, or by the obligation to publish annual accounts.
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VAT FRAUD
Conclusions
The recent arrests of the European Court of Justice and the Court of Cassation
have finally come to mind the difficult position of the transferee in good faith
in the provision of the opposing evidence and, therefore, seem to want to
ensure greater protection for the taxpayer who unknowingly finds himself
participating in a "carousel fraud", that is, the fraud of a fictitious Company in
intra-community trades.

23. INVOICING REQUIREMENTS IN ELECTRONIC COMMERCE
With the provisions of Legislative Decree 42/2015 and Ministerial Decree of 27 October 2015 the
operators who carry out on-line transactions to final consumers (B2C - Business to Consumer) are
no longer obliged either for direct electronic commerce (service delivery), or for indirect
electronic commerce (supply of goods), to certify by invoices the fees paid.
Classification of electronic commerce transactions
B2B operations: the so-called "Business to Business" include all transactions between taxable
subjects
B2C Operations: the so-called "Business to Consumer" include all operations carried out with the
end customer
Type of electronic commerce
Direct electronic commerce: those transactions where the transfer of the asset, such as all the
trading activity (from the proposal to the conclusion of the contract, from the payment to the
delivery of the purchased goods), takes place entirely on line
Indirect electronic commerce: those transactions which, following the realization that takes place
on line, from the sale to the choice of the product and up to the payment, have the delivery of
the goods through the traditional channels
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24. INVOICING REQUIREMENTS IN ELECTRONIC COMMERCE
Territoriality of electronic commerce transactions
Indirect electronic commerce: the general discipline on territoriality, as envisaged by D.P.R.
633/1972 and by D.L. 331/1993 for the supply of goods, must applies
Direct electronic commerce: the discipline referred to in Articles 7-ter and following of D.P.R.
633/1972, relating to the provision of services provided by electronic means, must applies
B2C indirect electronic commerce
Sales occurring in the national territory: reference is made to Art. 2 of D.P.R 633/1972
Sales in the Community: similar to sales by mail or by distance
B2C indirect electronic commerce
The issue of the invoice is no longer compulsory, unless it is required by the customer, for the
provision of telecommunication services, broadcasting services and distance electronic services
made to buyers acting outside of business, art or profession activity.
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25. CHANGES IN VAT PENALTIES
Legislative Decree 158/2015
Review of the administrative and penal sanction system in accordance with the criteria
of proportionality and adequacy of the sanction with regard to the wrongful conduct.
Facilitating sanctions for cases of purely or predominantly formal and / or non-
violating infringements for the Treasury.
Integral review for the sanctions related to reverse charge and letters of intent.
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26. CHANGES IN VAT PENALTIES
Sanctions on reverse charge transactions
The transferor / lender correctly issues the invoice without applying the tax, but the transferee /
buyer does not meet the accounting reversal requirements: if the invoice received was not
completely concealed, but is still from the accounting for direct taxes, a sanction will be imposed
in a fixed amount, between € 500 and € 20,000; if the record is missing in the accounting, the
penalty is applied proportionally (from 5% to 10%) and is commensurate with the taxable
amount, with a minimum of € 1,000.
The transferor / lender does not issue the invoice within four months of the transaction and the
transferee / buyer does not settle within 30 days the omission: a proportional penalty is applied
between 5% and 10%, commensurate with the taxable amount, with a minimum of € 1,000, as
well as the penalty for undue deduction and that for unfaithful VAT return.
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27. CHANGES IN VAT PENALTIES
Sanctions for suppliers of regular exporters
Previous discipline
Sanction from 100% to 200% of the tax if the transferor or lender failed to send the
statement of intent within the deadlines or sent it with incomplete or inaccurate data
Current discipline
Sanction to a fixed amount, from a minimum to a maximum (from € 250 to € 2,000) if
the assignor or lender performs transactions with the habitual exporter before he has
received the statement of intent and has found the submission to the Revenue Agency
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28. Thanks for your constructive feedback
and support to TRA !
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ITALIAN VAT SYSTEM