Under the Italian VAT refund procedure, a non-established taxpayer requesting a VAT refund via its Italian VAT return must submit a bank or insurance guarantee covering the full amount of the VAT refund. The guarantee must be submitted for each VAT refund request and must be maintained for a period of three years, even after the VAT refund has been made. Contrary to that businesses established in Italy and meeting certain criteria may be exempt from the requirement to submit a guarantee.

The European Commission has decided to launch infringement proceedings against Italy as they consider Italy to be in breach of the principles of neutrality and proportionality due to the  excessive delay in making refunds, even where it is established that the refunds are due and indisputable as well as due to conditions imposed on taxpayers in order to be relieved from the obligation to provide a guarantee, in order to benefit from a shortened VAT refund period, are too stringent and automatic. And due to the fact that the taxpayers are exposed to financial risks in their attempt to recover input VAT, due to an excessively long time period in respect of the annual VAT refund.