VAT representative in Italy
The mandatory tax representative for selling in Italy
When is necessary a VAT representative in Italy
The rules of VAT representative in Italy of a non-resident foreign operator are provided by Article 17 of Presidential Decree no. 633/72.
An economic operator who is not resident in Italy, whether from EU or non-EU, who carries out transactions in the territory of Italy relevant for VAT purposes (eg sales of goods or services), can:
fulfill its obligations to pay VAT in Italy or
exercise the right of VAT reimbursement by:
appointing a VAT representative resident in Italy, or alternatively;
choose the Direct VAT identification in Italy for himself.
Economic operators not resident in Italy:
- who carry out economic activities in Italy or
- which carry out single economic transactions in Italy;
are identified for VAT purposes in Italy in the following cases:
A) when there is a permanent tax establishment: this is the case when a non-resident person carries on a stable economic activity in Italy (according to the list of cases set out in Article 5 of the OECD model of double taxation treaty) and qualifies as taxpayer to the Revenue Office in Italy;
B) when a VAT representative is appointed: it is appointed when a legal person non-resident in Italy carries on in Italy single VAT-related economic transactions (eg sales of goods or services);
the appointment of the VAT representative in Italy is mandatory:
- when the Italian purchaser is an individual (natural person) - otherwise the sale of goods or services to that individual would remain tax-free if there is no VAT representative who must pay VAT tax in Italy - in practice, the sale of goods carried out in Italy by a foreign operator non resident in Italy towards a natural person in Italy implies the obligation to pay VAT in Italy, the invoice is issued by the non-resident operator and consequently arises the obligation to pay VAT to the Italian state, however, the natural person cannot pay VAT because he has not the VAT code, he cannot also issue a self-invoice and therefore it is necessary to appoint a VAT representative who will pay VAT on behalf of the non-resident operator;
- for distance sales;
C) direct VAT identification: (read here)
- only non-resident operators who carry on business, art or profession in other EU Member States may use direct identification;
- operators residing in a third country outside the EU can ask for direct VAT identification in Italy only if exists a cooperation treaty between Italy and their country.
The appointment of a tax representative in Italy (which may also be a company, provided that it is based in Italy) and direct VAT identification in Italy are alternative options, so that the non-resident operators cannot simultaneously use a VAT representative and also do the direct VAT identification in Italy; when a non-resident foreign operator has already appointed a VAT tax representative in Italy, if he later decides to make direct VAT identification, he will have to close the existing VAT ID code; a non-resident foreign operator in Italy may appoint only one VAT tax representative.
In any case, the appointment of a VAT representative in Italy and the direct VAT identification are not such as to acquire residence in Italy to the foreign operator, who will continue to be resident abroad.
If the non-resident foreign operator does not choose any of the three above-mentioned A), B), C) procedures, the VAT payment obligations relating to the transactions carried out in Italy will be transferred to the Italian taxpayers which will have to issue self-invoice.
The appointment of the VAT tax representative is compulsory when the taxable transaction is performed in Italy and the obligation to pay VAT is charged on the non-resident operator, this occurs in the following cases:
a) for sale of goods or services to consumers (which haven’t the VAT ID code) or, in any case, to subjects who (for VAT purposes) are regarded as consumers while having VAT ID code (such as non-commercial entities);
b) for sale of goods and services to non-residents;
c) in any particular situations concerning intra-Community sales, such as:
- distance sales above the threshold of Euro 35,000;
- introduction of goods into VAT warehouse (Article 50-bis DPR 633/72);
- some cases of triangular or quadrangular operations.
The appointment of the VAT tax representative is optional to allow the non-resident operator to deduct the VAT paid on purchases made in Italy.
The VAT representative is jointly liable with the non-resident operator, which he represents, for all the obligations under Italian law and for the payment of VAT due to the Italian tax authority; in practice, the VAT tax representative requires to the non-resident foreign operator to enter into a security policy that may be triggered by the VAT representative if the non-resident foreign operator fails to pay the amount of VAT because that amount of tax is required by the tax authority to the VAT representative.
The appointment of the VAT representative in Italy must be communicated to the competent Revenue Office by the tax representative, it must be performed by the submission of the following documents:
A) public act; or
B) a document authenticated by a foreign state notary; or
C) a private script authenticated; or
D) a letter recorded in a special register at the Revenue Office; or
E) communication to the Revenue Office in accordance with the provisions of Article 35 of Presidential Decree no. 633/72,
In any case, you must submit a declaration of starting of activity at the Revenue Office (by AA7 Model or AAA Model)) asking for the release of VAT ID code.
The VAT representative is liable in full jointly with the represented operator for the obligations under the VAT legislation regarding:
- invoicing (issuance and registration of active invoices; annotation of passive invoices);
- registration of documents;
- periodic and annual liquidation of VAT;
- VAT payments;
- submission of annual declarations and all that is provided by the regulations for transactions carried out in Italy.
The VAT representative is responsible for:
a) in addition to the payment of VAT, even for
b) sanctions resulting from non-fulfillment of:
i. transactions that he had to fulfil;
ii. transactions where the VAT representative has intervened as an agent, for example:
- no record of invoices found in his possession;
- non-payment of VAT due to periodic VAT liquidation;
- non-payment of VAT due to annual VAT return.
The VAT representative must fulfill all obligations under the VAT law, such as:
- issuance and recording of active invoices;
- recording of passive invoices;
- doing periodic liquidations;
- submission of data and declarations.
Invoices issued and received by the foreign taxpayer must always indicate:
- exact designation and identification of the taxpayer;
- exact indication of VAT representative.
The invoices will be issued by the foreign operator non-resident in Italy after the prior notice to the customer in Italy of the appointment of the VAT representative in Italy, the invoices may be issued:
a) directly by the VAT representative to the customer, with the addiction of VAT;
- the foreign operator non-resident in Italy will issue a sale invoice towards the VAT representative in Italy which will be numbered and integrated by the VAT representative (as per Article 46 of Legislative Decree 331/93);
- the foreign operator non-resident in Italy will deliver the goods directly to the clients in Italy;
b) directly by the foreign operator not resident in Italy towards a customer in Italy, by an invoice also bringing the data of exact identification of the VAT representative (including the VAT ID code of the latter) and all the provisions as per Art. 21 DPR 633/1972 about formalities and contents; consequently, in this case, the customer in Italy will have to pay the VAT through reverse charge and not by way of reimbursement.
Invoices issued by Italian operators to operators non-resident in Italy - who have appointed its own VAT representative in Italy before the taxable transaction (sale) - must bear the name of the foreign operator and the identity data of the VAT representative.
The foreign operator is entitled to VAT rights in Italy, for example the refund of VAT in Italy (as per Article 38-Bis2 of Presidential Decree No. 633/1972), for which will provide his VAT representative in Italy.
Pursuant to Resolution No. 301 / E of 12 September 2002:
- the VAT representative in Italy of a foreign operator non-resident in Italy cannot deduct VAT from invoices issued directly to the foreign operator before the date of his appointment;
- the foreign operator non-resident in Italy may apply for a refund of VAT (Articles 38-bis2 and 38-ter DPR 633/72).
According to Resolution No. 21 / E of 20 February 2015:
- for the sale of goods already present in Italy made by a foreign operator non-resident in Italy to a customer in Italy, the invoice must be issued by the foreign operator;
- for sales made in Italy by an EU operator non-resident in Italy who has appointed a VAT representative in Italy, the relevant invoice must be issued by the operator to the final customer in Italy, which will have to fulfill all the obligations of VAT;
- for sales made in Italy by a non EU operator non-resident in Italy, who has appointed a VAT representative in Italy, the final customer in Italy will have to issue a self-invoice and pay VAT.
The "Light VAT representative" in Italy
The EU commercial operator who carries out in Italy exclusively non VAT taxable transactions (for sales or for purchases) may use the so-called "light" VAT representative, who issues invoices only for transactions already made and submits the Intrastat models and he is not obliged to registration and submission of the annual VAT declarations.
Such simplification will terminate after making the first active or passive transaction involving the payment of VAT or its recovery.
Who carries out a VAT deposit in Italy carries out two functions:
(A) he must keep accounts and comply with the administrative formalities of the goods stored in the warehouse owned by a non-resident operator;
B) he acts as a VAT representative of the operator non-resident in Italy who is not identified for VAT purposes in Italy for transactions relating to the goods in storage.
Also in such cases, the VAT representative is called "light VAT representative" because his intervention is limited to the submission of the Intrastat models compiled that summarize intra-community transactions.
The service provided by the light VAT representative applies both:
to the operator resident in another EU country which deposits his goods in a VAT warehouse in Italy and
to the depositor who is resident outside the EU.
The VAT representative ceases to be a "light" representative when the first active or passive transaction involving the payment or recovery of VAT is done, as a result the foreign operator must ask for release of ID for VAT purposes in Italy, so that he has the following possibilities:
- to appoint a VAT representative in Italy; or
- to make his own identification for VAT purposes, the so called direct VAT identification in Italy; if this choice is made, the manager of the warehouse where the goods have been deposited must be immediately informed because the function of the VAT representative and that of the direct VAT identification of a non-resident operator cannot coexist.