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New (shortened) deadline to exercise the right of VAT deduction in Italy

A recent Italian decree law (number 50 , 2017) has shortened the time period for exercising the right of VAT deduction in Italy.

For the Italian input VAT invoices/import documents received in the year 2017, the right of VAT deduction can be now exercised within the deadline to submit the yearly VAT declaration of the same year 2017. This means that the VAT has to be reclaimed by the 30th of April 2018.

For the year 2016, the deadline to exercise the right of VAT deduction based on the “old” rule in force until the end of 2016, was in fact the same deadline for the submission of the annual VAT declaration of the second following year. As a consequence, from the year 2017 onwards, the time period for the VAT deduction is halved in comparison to the past.

The right to deduct VAT when the VAT becomes due (for the supplies of goods this is the moment of the delivery and for the supply of services) is the moment of the payment of the consideration or the moment of the invoice issuance (if the invoicing proceeds the payment).

Even if the new law text reducing the time period to exercise the right of VAT deduction is still under debate, it is recommended that each operator receives the purchases invoices and the customs bills dated 2017 by mid-January 2018, or at the latest by the first few months of 2018. This way businesses will respect the regulatory requirements to exercise the right of VAT deduction and they will be certainly “on the safe side”.

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