Italy’s Finance Ministry has made an application to the European Commission (EC) to extend the VAT split payment mechanism.
Since 2015, the EC has allowed the split payment mechanism in Italy for supplies to government organisations. This new application plans to extend this ability to other VAT-related industries.
This anti-fraud measure requires the acquirer of designated goods or services to directly pay any VAT to the tax authorities, rather than the vendor. This reduces any likelihood of any potential VAT fraud by taking the cash element out of the system.