The European Commission has granted Italy approval to continue using anti VAT fraud split payments regime with state organisations, and to extend the measures to state-owned companies and stock market quoted companies.
VAT split payments
When an EU Member State believes, there is substantial evidence of VAT fraud, it may apply to derogate from Articles 206 and 226 of the EU VAT Directive in respect to VAT payments and invoicing necessities made to public authorities.
There is evidence from Italy of extensive fraud on payments by suppliers to the Italian state. Due to this proof, Italy was approved permission to temporally implement a split payment rule until the end of 2017. Suppliers now require to pay the VAT element of invoices to the state directly to a specific tax bank account with the tax authorities.
Italy has reported higher than anticipated increase in VAT receipts since the implementation of this measure. Nevertheless, Italy has specified that is has not yet executed all useful methods to remove the measure without the risk of delays in collections.
Additionally, Italy has since recognised comparable VAT payment fraud to state controlled companies and over 40 recited companies. Therefore, the request for an extension of the current measure, and for it to be extended to companies controlled by public authorities and companies listed on the stock exchange.
This request was approved by the commission this month, with the implementation from 1st May, 2017. The European Council of Ministers must ratify the decision also.
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