Italy – how to calculate guarantee amount of the fiscal representative and non-resident entities due

May 8, 2025 Michaela MerzLeave a comment

New obligations for fiscal representatives and non-resident entities in the European Union intending to carry out intra-EU transactions

With two new ministerial decrees dated 4th^[1] and 9th^[2] December 2024, the Ministry of Finance has implemented the new obligations introduced by legislative decree No. 13 of February 12th, 2024.

In implementation of the new paragraph 7 quater of Art. 35 of d.P.R. 633/72^[4] (“VAT Decree”) and the new phrase of paragraph 3 of Art. 17 of the VAT Decree^[5], those intending to assume the role of fiscal representative of foreign entities not established for VAT purposes in Italy must jointly:

possess the personal integrity requirements indicated by Art. 8, para. 1, lett. a), b), c) and d) of Ministerial Decree no. 164 of May 31th, 1999^[6];
submit to the competent Provincial Directorate of the Italian tax authorities on the basis of the fiscal domicile of the fiscal representative (hereinafter referred to as “competent PD”) a notarial deed pursuant to Arts. 46 and 47 of Presidential Decree 445/2000, aimed at attesting the existence of the aforementioned personal integrity requirements;
personally provide an appropriate guarantee to the competent PD if they intend to represent multiple entities^[7];
verify the completeness of the documentation and information set produced by the represented entity established outside the EU, in order to include their VAT number in the VIES database, and its corresponding accuracy to the information in their possession.

Fiscal representatives who meet the requirements of integrity and have provided adequate guarantee will be available for consultation on the Italian tax authorities’ website.

Fiscal representatives who, on the contrary, do not fulfill the new guarantee obligations are subject to an administrative penalty ranging from 3,000 euros to 50,000 euros, without the possibility of applying the legal cumulation^[8].

The guarantee referred to in point sub. 3 must be personally submitted by the fiscal representative and must meet the following requirements:

Form: (i) collateral in goverent bonds or bonds guaranteed by the government; or (ii) bank guarantee; or (iii) guarantee insurance policy;
Beneficiary: acting director pro tempore of the competent Provincial Directorate of the Italian tax authorities on the basis on the fiscal domicile of the fiscal representative (hereinafter “competent DP”);
Minimum amount^[^9]:
- €30,000.00, if the representatives are min. 2 max 9;
- €100,000.00, if the representatives are min. 10 max 50;
- €300,000.00, if the representatives are min. 51 max 100;
- €1,000,000.00, if the representatives are min. 101 max 1,000;
- €2,000,000.00, if the representatives are more than 1,000.00.

Submission method: personally by the fiscal representative to the competent DP;
Duration: for a minimum period of 48 months from the date of assuming the role of fiscal representative, i.e. from the date of submission of the guarantee to the competent DP (after which it does not need to be resubmitted).

Furthermore, with the ministerial decree of December 4, 2024, the Ministry of Finance has outlined the criteria and methods for issuing the guarantee that non-EU taxable persons – identified in Italy through a fiscal representative as per Art. 17, paragraph 3, of the VAT Decree – must present in order to include their VAT number in the VIES database to carry out intra-EU transactions in Italy.

This guarantee must be presented directly by the non-EU entity or through their fiscal representative to the competent DP and must meet the same formal requirements mentioned above for the fiscal representative’s guarantee. In this case, the minimum amount to be guaranteed must be equal to 50,000.00 euros for a minimum duration of 36 months from the date the guarantee is submitted (after which – even in this case – it does not need to be resubmitted).

On this matter, both the Italian tax authorities and the Italian financial police will jointly conduct specific risk analyses aimed at identifying the fiscal representatives of non-EU entities that present indicators of risk regarding the proper fulfillment of obligations to verify the completeness and accuracy of documents produced by the foreign entity.

For both changes to become operational, it is still necessary to wait for the issuance of two provisions by the Director of the Italian tax authorities, who has been entrusted with the operational aspects.

Finally, it is worth noting that the changes will also apply to fiscal representatives and non-EU entities (which carry out intra-EU transactions) even before the entry into force of the regulation and that they will continue to operate in the same manner. Indeed, the fiscal representatives, who will act as such on the date of publication of the relevant operational measure, will be required to submit the declaration of notarial deed and the guarantee within 60 days from that date, under penalty of termination of the VAT number of the foreign subject^[10]. Similarly, non-EU subjects who, on the date of publication of the relevant operational measure, are already included in the VIES, will be required to present the guarantee within 60 days from that date, under penalty of exclusion from the aforementioned database^[11].

For further information please contact Davide Accorsi at davide.accorsi@pwc.com.

^[1] Published in Official Journal No. 292 of December 13th, 2024.

^[2] Published in Official Journal No. 297 of December 19th, 2024.

^[4] Pursuant to the new paragraph 7-quater of Art. 35 “By way of derogation from the first sentence of paragraph 7-bis, for taxable persons not residing in a member state of the European Union or in one of the states that are part of the European Economic Area who fulfill the obligations arising from the application of the rules on Value-added tax through a fiscal representative, appointed pursuant to Article 17, third paragraph, of the decree of the President of the Republic of October 26^th, 1972, no. 633, the inclusion in the database of taxable persons carrying out intra-community operations occurs upon the provision of an appropriate guarantee. By decree (11) of the Minister of Economy and Finance, the criteria and methods for issuing the guarantee referred to in the first sentence are identified. The fiscal representative who submits to the Italian tax authorities the declaration of commencement or change of activity, which includes the exercise of the option for inclusion of the VAT number in the database of taxable persons carrying out intra-EU transactions as provided by Article 17 of Council Regulation (EU) No. 904/2010, of 7 October 2010, referred to in paragraph 2, letter e-bis) of this article, is obliged to verify the completeness of the documentary and informational set produced by the taxpayer and its correspondence to the information in their possession. By decree of the Minister of Economy and Finance, the terms and methods of intervention for verifying the obligations provided for in this paragraph are identified, to be implemented also based on specific operational agreements concluded between the Italian tax authorities and the Italian financial police”.

^[5] Pursuant to the last period of paragraph 3 of Art. 17 “The fiscal representative must meet the subjective requirements outlined in Article 8, paragraph 1, letters a), b), c), and d) of the decree by the Minister of Finance dated May 31, 1999, No. 164. (4) In the event of appointing a legal entity, the above requirements must be met by the legal representative of the designated entity appointed pursuant to this paragraph. (4) A decree by the Minister of Economy and Finance identifies the criteria under which the fiscal representative can assume this role only after providing an appropriate guarantee, also adjusted in relation to the number of represented subjects.”

^[6] The fiscal representative must not (i) have been convicted, even if not definitive, for financial crimes, nor have entered into a plea bargain related to the same; (ii) have ongoing criminal proceedings at the trial stage for financial crimes; (iii) have committed serious and repeated violations, by their nature and extent, of tax and contribution regulations; (iv) be in any of the conditions that lead to ineligibility and the inability to maintain certain positions, as per Art. 15, co. 1, of Law no. 55 of 1990.

^[7] Those who intend to represent only one entity are exempt from providing the guarantee and are required to submit only the affidavit as per sub-point 2.

^[8] See paragraph 7-quinquies added to Art. 11 of Legislative Decree No. 471/1997.

^[9] If the increase in the number of represented entities results in a shift from one bracket to another, the tax representative must present the guarantee again for the new maximum limit.

^[10] In cases where the failure to submit the declaration of affidavit or guarantee by the fiscal representative is contested, the Italian tax authorities notify the same fiscal representative, via certified email (PEC) or registered mail, of the initiation of the procedure for the automatic termination of VAT numbers for the represented entities. Sixty days after the fiscal representative receives the notification, the Italian tax authorities proceed with the automatic termination of the VAT number of the represented entities.

^[11] In cases where the aforementioned guarantee is not provided, the Italian tax authorities communicate to the fiscal representative of the non-resident subject, via certified email (PEC) or registered mail, the initiation of the procedure for excluding the represented subject from the VIES database. Sixty days after the date of receipt of the communication by the fiscal representative, the Italian tax authorities proceed with the automatic exclusion of the VAT number from the cited database.

EU: VIDA update

November 8, 2024 Michaela MerzLeave a comment

On 5 of November 2024 the European Council has adopted the VAT in the Digital Age (‘VIDA’) package. This means that significant changes will be made to the EU VAT system starting from 2027.

In short, VIDA applies to all businesses that sell goods and/ or services in the EU, irrespective of whether they are established in an EU Member State or not. The three main pillars of VIDA are:

Introduction of Digital Reporting Requirements – modernize the process of invoicing and move to mandatory e-invoicing on intra-EU business to business transactions

Electronic invoicing will become the default system for issuing invoices and eventually holding a valid e-invoice will become a material VAT recovery requirement. However, Member States will be allowed to authorise other invoices for domestic supplies.
Invoices that have been issued, transmitted and received in electronic format that allow for automatic electronic processing will be considered to be electronic invoices and they should in principle comply with the European Standard (EN16931) and its list of syntaxes (other formats are allowed as long as these data formats ensure interoperability with the European Standard). Member States will not be allowed to request any additional data, to avoid unnecessary administrative burden. Summary invoices will be allowed (however, Member States may exclude this possibility in certain fraud sensitive sectors).
The electronic invoices for cross-border transactions must be issued no later than 10 days following the chargeable event.
The current recapitulative statements (EC sales listings) will be replaced with DRR for cross-border supplies of goods and services. The reporting of the invoice data by the supplier needs to happen in real time (i.e. at the time the invoice is issued or should have been issued). However, in situations of self-billing or reporting by the buyer, the buyer needs to transmit the information no later than five days after the invoice is issued or should have been issued.
Although real-time reporting of domestic transactions is not required under the EU VAT Directive, should a Member State opt to implement such a system, it will need to align with the digital reporting requirements for cross-border supplies. Member States can decide that holding an electronic invoice issued in compliance with the required standard becomes a substantive condition to be entitled to deduct or reclaim the VAT due or paid.
Member States will not be allowed to impose any additional general transaction-based reporting requirements, but may keep national measures to prepare/submit VAT returns for audit purposes, e.g., SAF-T requirements and reporting obligations which are not general such as cash registers.

The requirements above will apply as from 1 July 2030 with specific rules for Member States with domestic digital real time transaction-based reporting obligations already in place or announced on 1 January 2024 (who will have to converge their national systems into the ‘EU model’ by 1 January 2035).

2. Introduce a deemed supplier rule for platforms that facilitate short-term accommodation rentals and passenger transport services by road

3. Reduce the need for multiple VAT registrations through expansion of the One-Stop Shop, the introduction of a specific scheme for the transfer of own goods and a mandatory application of the reverse charge mechanism.

For further details please contact:

Nizora Yakubova
Senior Manager, Tax & Legal Services, PwC Switzerland
Tel.: +41 58 792 46 66
E-Mail

Switzerland : Partial Revision of Swiss VAT Act and Ordinance as from 1 of January 2025

November 7, 2024November 7, 2024 Michaela Merz1 Comment

https://www.pwc.ch/en/insights/tax/tax-and-legal-newsletter-3-2024.html

Starting 1 January 2025, a revision of the Swiss VAT Act will be implemented and will bring certain changes. Below is an overview of the most important updates that you should be aware of:

Platforms: New VAT Rules for Digital Platforms

The revised VAT Act will introduce significant modifications impacting digital platforms. One of the key changes is that the VAT registration obligation will shift from the supplier to the platform. Platforms will be required to act as “deemed suppliers”, register for Swiss VAT, and charge, collect, and remit Swiss VAT on all subsequent supplies of goods.

The “deemed supplier” concept will apply to both cross-border and domestic supplies, where two separate transactions will be deemed to have taken place under certain conditions:

Supply from the supplier to the platform – without Swiss VAT:
Domestic supplies: VAT exempt (with the right to deduct input VAT)
Cross-border supplies to Switzerland: place of supply abroad, no Swiss VAT

Supply from the platform to the end customer:
Domestic supplies: subject to Swiss VAT
Cross-border supplies to Switzerland: import Swiss VAT (generally) + local Swiss VAT on the supply to the end customer (whether B2C or B2B)

The resulting VAT implications for the marketplace operator/platform as of 2025 are as follows:

VAT registration for the platform is required if the marketplace operator’s turnover from low-value consignments from abroad exceeds CHF 100,000 per year (or, in the case of domestic supplies in Switzerland, if worldwide turnover exceeds CHF 100,000 per year).
If turnover from low-value consignments from abroad exceeds CHF 100,000 per year, the place of supply is deemed to be in Switzerland and all subsequent supplies of goods from abroad to end customers in Switzerland, regardless of the value, are subject to Swiss VAT. The platform must act as the importer of record and charge Swiss VAT to Swiss customers (even if no import VAT was due for the relevant low-value consignments).

Reporting & Declarations: Simplified Processes for Annual Declarations

Until now, companies had the flexibility to file VAT returns quarterly, semi-annually, or monthly. As of 1 January 2025, businesses with annual revenues of up to CHF 5,005,000 can opt to file VAT returns annually.

Adjustments to VAT Exemptions

Certain adjustments have also been made regarding VAT exemptions. New VAT exempted services are (these are generic description that need to be analyzed in further detail on a case-by-case basis):

Travel services resold by domestic and foreign travel agencies, along with their related services. (Foreign travel agencies will not be liable for tax in Switzerland when organizing trips to Switzerland);
Active participation in cultural events;
Coordinated care services provided during medical treatments;
Provision of infrastructure for attending physicians in outpatient and day clinics;
Care and domestic services provided by private home care organizations;
Provision of staff by non-profit organizations;
Offering and management of Swiss Investment Foundations.

Emission rights and green certificates

The VAT revision shifts the identity of the VAT-liable person when it comes to emission rights (green certificates and similar rights and certificates). From 1 January 2025, the recipient of such certificate will have to apply reverse charge on such acquisitions (whether the provider is domiciled in Switzerland or abroad).

Tax rate changes for feminine hygiene products

Feminine hygiene products are now subject to the reduced VAT rate (2.6%).

For further details please contact Roland Reding

Roland Reding
Partner, VAT Financial Services Tax, PwC
Tel.: +41 79 540 32 49
Email

Switzerland: New e-commerce VAT rules as from 2025

September 17, 2024 Michaela Merz1 Comment

Deemed supplier concept’ for platforms

Current situation
Suppliers selling goods to Switzerland from abroad via an online platform have to register for VAT and charge VAT on the subsequent supplies if their annual turnover from low-value consignments (VAT mount
< CHF 5) exceeds CHF 100,000. There are currently no VAT implications for B2C sales via platforms.

Changes as of 2025
The ‘Deemed supplier concept’ will be introduced for cross border AND domestic supplies – two separate transactions will be deemed to have taken place under certain conditions:

1. Supply from the supplier to the marketplace
holder – without CH VAT:
a. Domestic supplies: VAT exempt (with input VAT deduction right)
b. Cross-border supplies to CH: place of supply abroad, no VAT

2. B2C supply from the platform:
a. Domestic supplies: subject to Swiss VAT
b. Cross-border supplies to CH: import VAT (generally)
+ Swiss VAT (8.1% / 2.6%) on the supply to the end-customer

Resulting VAT implications for the platform as of 2025:
The platform is obliged to register for VAT if the platform’s turnover from low-value-consignments from abroad exceeds CHF 100,000 per year (or in the case of local supplies in CH, if worldwide
turnover exceeds CHF 100,000 per year).

If turnover from low-value-consignments from abroad exceeds
CHF 100,000 per year:

The place of supply performed by the platform is deemed to be
in Switzerland.
All subsequent supplies of goods from abroad to B2C customers in Switzerland, regardless of value, are subject to Swiss VAT, i.e. the platform will generally act as the importer of record and charge Swiss VAT to Swiss customers (even if no import VAT was due for the low-value-consignments
in question). The end result of this is that the obligation to register for VAT is shifted from the supplier to the platform.

The end result of this is that the obligation to register for VAT is
shifted from the supplier to the platform.

Who is impacted?

Local and foreign electronic platform as deemed suppliers
Local and foreign suppliers performing B2C sales via an
electronic platform

Platforms are not impacted, if:
the platform is not involved in the ordering process
(neither directly nor indirectly)
no turnover results for the platform from the activities
conducted via the platform
the platform is only involved in the payment process
only advertisement services are performed
buyers are only forwarded to another online platform.

Definition of an electronic platform
An electronic platform is defined as an electronic interface actively connecting different suppliers and buyers online in order to enable the sales of goods between them.

Additional implications

Subsidiary liability for sellers: Suppliers are still subject to subsidiary liability together with the platform for the deemed supplies made by the platform.
Obligation for platform to disclose information to the Swiss tax authorities about the sellers operating on the platform as well as the products offered.
Administrative measures are possible in cases of noncompliance, such as import bans or even the destruction of goods in severe cases. Additionally, the names of non-compliant companies may be made public in order to protect customers.

Recommended immediate actions

Assess the VAT implications and validate VAT registration obligations in Switzerland.
Review your agreements and general terms and conditions, taking into account
the new subsidiary liability, the obligation for platforms to disclose information, and
other relevant obligations.
Prepare your ERP system considering the necessary changes in invoice processing
and layout, as well as compliance processes.
Align with your suppliers, customers, and logistics service providers to agree on any
potential changes in procedures.
Ensure awareness of the new rules within your organisation.

Contact:

Nizora Yakubova
Senior Manager, Tax & Legal Services, PwC Switzerland
Tel.: +41 58 792 46 66
E-Mail

Rebates: Court of Justice of the EU: judgment Novo Nordisk

September 16, 2024 Michaela Merz1 Comment

The CJEU published a new positive judgment for rebates case – specifically applicable to the pharmaceutical industry. Enclosed the link.

https://curia.europa.eu/juris/document/document.jsf?text=&docid=290012&pageIndex=0&doclang=EN&mode=lst&dir=&occ=first&part=1&cid=2014217

Court of Justice of the EU: judgement Novo Nordisk

Dispute Background:

Novo Nordisk, a pharmaceutical company, sells medicinal products in Hungary, some of which are subsidized by the National Health Insurance Fund Management Agency (NEAK).
Novo Nordisk is required to make payments to NEAK based on an ex lege obligation to make payments corresponding to 20% and 10%, respectively, of a portion of the social security subsidies relating to all medicinal products that are sold in pharmacies and benefit from public funding.
Novo Nordisk sought to reduce its taxable amount for VAT purposes by the amounts paid under this obligation. The claim was rejected based on the consideration that those payments, which were made pursuant to a statutory obligation, do not constitute a price reduction deductible from the taxable amount for VAT purposes.

Court’s Consideration:

The Court examined whether these payments could be considered a price reduction under Article 90(1) of the EU VAT Directive.
It was determined that these payments are not part of the financial consideration received by Novo Nordisk. More specifically, the Court anaylsed that since the portion of the sale price of the subsidised medicinal products which is paid by Novo Nordisk, through the tax authority, to the NEAK is fixed in advance and is mandatory, it cannot be regarded as part of the financial consideration for the supply of those medicinal products actually received by Novo Nordisk.
The Court clarified once more that the scope of Article 90(1) of the VAT Directive covers price reductions resulting both from agreements concluded between a pharmaceutical company and a State health insurance agency and from ex lege obligations such as those at issue in the main proceedings.

Conclusion:

The judgment clarifies that pharmaceutical companies are entitled to reduce their taxable amount for VAT purposes by the amounts paid to state health insurance agencies under statutory obligations, as these payments constitute a price reduction within the meaning of Article 90(1) of the VAT Directive.

Given this positive decision, I recommend to further analyse the impact of the case and how to best utilize it for rebates projects opened.

For further details please contact:

Andreea Dereli
Partner, Tax & Legal Services, PwC Switzerland
+41 58 792 42 78
E-Mail

Webinar: Centralised Clearance for Import (CCI) system in the EU

September 3, 2024 Michaela MerzLeave a comment

A first look for businesses

Trust & Check Trader: EU customs reform

September 3, 2024September 3, 2024 Michaela Merz1 Comment

The EU is planning to introduce a major reform of its customs legislation, which will affect the way goods are imported and exported in the single market. One of the key changes is the transformation of the current Authorized Economic Operator (AEO) status with a new designation of Trust and Check trader (T&C). Currently, the necessary details are included in the various draft documents, such as the impact assessment, that have been made available by the European Union Commission.