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19 February 2010
Pursuant to Article 10 of Legislative Decree 78/2009,(1) new rules on offsetting value-added tax (VAT) credits have been introduced with effect from January 1 2010.
A VAT credit represents the excess VAT input deriving from a VAT payer's business activity, which can be offset against its other tax charge during the fiscal year (ie, against corporation tax, regional income tax and social security contributions), up to an annual threshold of around €516,400.
However, a taxpayer cannot offset more than €10,000 a year until its annual VAT return is filed. Set-off can be carried out from the 16th day of the month following the filing of the return (or a claim showing the VAT credit). Thus, for 2010 the first VAT credit set-off can be made from March 16 2010, provided that the 2009 annual VAT return is filed by February 28 2010.
Taxpayers wishing to offset a VAT credit of over €15,000 in one year must obtain confirmation from an authorized professional on their VAT return. Alternatively, for companies subject to the mandatory audit procedure under Article 2409(2) of the Civil Code, the return can be signed by the auditors.
Thus, the annual VAT credit set-off works in one of three ways:
Failure to follow this procedure carries a penalty equal to 30% of the VAT credit under Article 13 of Legislative Decree 471/1997.
For further information on this topic please contact Marco Abramo Lanza or Simona Zangradi at Studio Legale Tributario Biscozzi Nobili by telephone (+39 02 763 6931), fax (+39 02 780 146) or email (email@example.com or firstname.lastname@example.org).
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