The Italian Stability Law of 2015 introduced article 17 ter to the VAT Decree n. 633/1972 on the split payment method. That method, which entered into force …
National Practice – Circolare 1/E of 9 February 2015 – VAT, clarification on the application of the split payment method
The Italian Stability Law of 2015 introduced article 17 ter to the VAT Decree n. 633/1972 on the split payment method. That method, which entered into force the 1st of January 2015, could not be applied whenever the reverse charge mechanism is applicable.
The provision allows the Public bodies to pay the VAT due on supplies of goods or services received directly to the Treasury. The consequence is that the person liable to pay VAT is formally the supplier, which issues the invoice with the VAT amount mentioning “scissione dei pagamenti”, but the public bodies, which receive the supply, pay the tax directly to the Treasury instead of the supplier.
The invoices related to these supplies have to be issued electronically.
The rationale of this provision is the fight against the “VAT GAP” as a guarantee of tax collection for the Treasury in case of non fulfilment of the taxpayer’s obligations.
The condition for the application of that method is the nature of public bodies of the recipient of the supply (acting in the public interest and not as an individual).
The subjects to whom the provision is addressed are public bodies, and the Circular provides a list of these subjects.
Prof. Paolo Centore