As a general rule, when dealing with Italy VAT refund for entities resident in non-EU countries that have carried out taxable transactions in the State, the procedure may be activated only through an Italian fiscal representative and follows the rules laid down for Italian residents under Article 38-bis of Presidential Decree No. 633/1972.
However, there is an important exception to this general principle.
A direct VAT refund — that is, one initiated directly by non-resident VAT taxpayers without the intermediation of a fiscal representative — is permitted where a condition of reciprocity exists with the non-EU State concerned.
The legal basis for such reciprocity generally derives from reciprocal agreements, namely treaties or international conventions under which a business resident in one country may obtain a refund of VAT paid in the other, provided that businesses from the latter country are granted the same right in the applicant’s country of residence.
As of today, reciprocal VAT refund arrangements are in force with Switzerland, Israel, Norway, and the United Kingdom.
Italy VAT refund: Bilateral Agreement with Switzerland
Italy and Switzerland entered into a Note verbale in 1997 establishing reciprocity in VAT refund matters for business operators. The agreement provides as follows:
“Following various discussions between the competent authorities, Switzerland and Italy agree as follows:
1. Switzerland declares to Italy that it guarantees full reciprocity and will refund to business operators domiciled and resident in Italy the value added tax paid by them in Switzerland, provided that Italy, in turn, guarantees to business operators domiciled and resident in Switzerland a right to refund corresponding, taking into account the mutual limitations on the right to deduct input tax, to that granted to taxpayers established in Italy.
2. Italy declares to Switzerland that it guarantees full reciprocity and will refund to business operators resident and domiciled in Switzerland the value added tax paid by them in Italy, provided that Switzerland, in turn, guarantees to business operators resident and domiciled in Italy a right to refund corresponding, taking into account the mutual limitations on the right to deduct input tax, to that granted to taxpayers established in Switzerland.”
This bilateral arrangement formally recognizes the direct VAT refund procedure for Swiss residents with respect to VAT paid in Italy.
Accordingly, such taxpayers are no longer required to appoint an Italian fiscal representative in order to request a VAT refund.
Italy VAT Refund without a Bilateral Agreement: Israel
Currently, no bilateral agreement exists between Italy and Israel regarding reciprocity for VAT refunds.
However, reciprocity has been recognized through a Verbal Note dated 25 November 2008, by which the Italian Embassy acknowledged the right of Israeli operators to claim a refund of VAT paid for services rendered in Italy, with retroactive effect from 1 March 2005.
Subsequently, the Italian Revenue Agency clarified the reciprocity framework between the two countries in its Ruling No. 248/2022. The Agency confirmed that appointing a fiscal representative in Italy does not prevent the foreign taxpayer from requesting a VAT refund, and outlined the conditions for refunds under Article 38-ter of the Italian VAT Decree:
- No active transactions in Italy (i.e., issued invoices), except for reverse charge operations (borne by the Italian client);
- The operations for which the refund is requested must be related to the activity of the non-EU taxpayer;
- The VAT claimed must be deductible;
- Reciprocity of treatment in the taxpayer’s country of residence.
Italy VAT refund: reciprocity with United Kingdom
With Resolution No. 7/E/2021, the Italian Revenue Agency confirmed that taxpayers established in the United Kingdom and operating in Italy can proceed with direct VAT identification under Article 35-ter of D.P.R. 633/1972, without appointing a fiscal representative.
Following Brexit, the question of reciprocity between Italy and the UK for VAT refunds remained to be clarified.
After the exchange of diplomatic notes between the two countries’ embassies, the application of Article 38-ter of D.P.R. 633/1972 was confirmed for refunds of VAT on transactions carried out from 1 January 2021. Accordingly:
- Taxpayers established in Italy can submit a VAT refund request to the UK in accordance with local law;
- Taxpayers established in the UK can request a VAT refund from Italy, provided the conditions under Article 38-ter are met.
At the national level, in Ruling No. 359/2021, the Italian Revenue Agency clarified that the appointment of a fiscal representative does not prevent a non-resident taxpayer from requesting a VAT refund through the electronic portal, as long as the conditions are met and no obstacles to the refund exist under Article 38-bis.2 of the VAT Decree.
Italy-UK Reciprocity Agreement
This framework was further strengthened in February 2024 with the signing of the Italy-UK Reciprocity Agreement, effective 7 February 2024, with retroactive effect to 2021.
The Agreement expressly provides for full application of the following laws:
- Italian side: Articles 38-bis.2 (Refunds to non-residents established in another EU Member State) and 38-ter (Refunds to non-residents established in non-EU States) of D.P.R. 633/1972;
- UK side: VAT Act 1994, Section 39, and VAT Regulations 1995, Part XXI (SI 1995/2518), §§185–188.
The Italian Revenue Agency acknowledged the Agreement in Resolution No. 22, 2 May 2024, confirming that, regarding transactions from 1 January 2021 with the UK, Article 38-ter of D.P.R. 633/1972 applies for VAT refunds:
- Taxpayers established in Italy may submit VAT refund requests to the UK under the applicable local legislation;
- Taxpayers established in the UK may request VAT refunds from Italy according to Article 38-ter, which refers to paragraph 1 of Article 38-bis.2 of D.P.R. 633/1972.
Refund requests must be submitted in accordance with the provisions of the Director of the Revenue Agency, 1 April 2010.
Italy VAT refund: reciprocity with Norway
Italy and Norway established reciprocity for VAT refunds through the exchange of diplomatic notes dated 17 May – 13 June 2000.
Thanks to this Agreement, Norwegian taxpayers can access the refund procedure under Article 38-bis without appointing a fiscal representative in Italy. This possibility was later confirmed by the Italian Revenue Agency in Response No. 248/2022.
Norway, together with the United Kingdom, is the only non-EU country that allows taxpayers to directly identify in Italy to carry out transactions relevant in the country. For further details on direct identification, see our dedicated article.
The procedure for submitting these refunds, established by Provision of the Italian Revenue Agency 29 April 2010, No. 64109, applies uniformly to all non-EU taxpayers for whom reciprocity agreements exist.
Specifically, the Provision approved Form IVA 79, to be used to request refunds of VAT paid in Italy on purchases, imports of movable goods, and services related to the taxpayer’s business activity.
