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VAT – Failure to invoice and submit a return – Applicable penalties and related active repentance

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In its reply No. 450/2023, the Agency clarifies how to remedy omissive behaviour concerning a real estate brokerage company’s failure to invoice and to file a VAT return.

The applicant’s question

The question concerns a foreign company that has been operating in the real estate auction sector on Italian soil since 2016 and has been domiciled and registered for VAT purposes in Italy since Aprile 2023. Over these years the society has allegedly failed to charge VAT for intermediation services to private clients and to taxable persons not established in the State.

The services provided, however, qualify for VAT purposes since they are strictly related to the goods sold (Article 47, Directive 2006/112/EC, and Article 7c(1)(a) of Presidential Decree 633/1972). The company therefore asks how to rectify their situation by paying the tax due and reducing penalties and interest by means of a ravvedimento operoso (“active repentance”).

The Agency’s reply

The Agency notes the following violations:

VAT amount due

Reference is made to the “recovery system”, the system on which value added tax is based and which allows the tax to be charged in the various passages from taxable person to taxable person up to the final consumer.

Violations of accounting obligations

The Agency cites Article 9 of Legislative Decree No. 471 of 18 December 1997, which sets out the penalties for failure to keep accounts.

The company is therefore required to set up the necessary books and records, issue invoices for the transactions carried out and then pay a single penalty under the above-mentioned article.

Declaration of commencement or variation of activity

Article 35 of the VAT decree provides that the communication of commencement of the activity or the establishment of a permanent establishment must be submitted within 30 days to one of its offices.

Failure to file or late filing remains punishable under Article 5(6) of Legislative Decree No. 471/1997, but it is still possible to take advantage of the “active repentance” as specified in reply No. 86 of 5 March 2020.

Omitted payments and omitted return

To rectify its position with the tax authorities, the company is required to:

  • Issue the omitted invoices for each tax period. The Agency also points out that the date of issue shall be the date on which the invoice is made, while the date of the transaction must refer to the date of receipt for the service provided;
  • Communicate the data of the periodic settlements it has failed to provide, unless regularisation occurs directly through the annual VAT return or after its submission;
  • Even if it remains formally omitted, the company must submit the VAT return and pay, if due, the tax with due interest.

The company is required to pay penalties

The company may avail itself of the active repetance for penalties related to:

  • Failure to invoice;
  • Failure to communicate periodic settlement data;
  • failure to pay the VAT due.

On the other hand, the proportional penalty will be applied for the omission of the VAT return (because it exceeds the 90-day deadline for submitting the return).

Regulatory Framework

Article 47, Directive 2006/112/EC

Reference (Italian only)

Article 7c(1)(a) of Presidential Decree 633/1972

Reference (Italian only)

Reply no. 86 of 5 March 2020

Reference (Italian only)

Article 9 of Legislative Decree No. 471 of 18 December 1997

Reference (Italian only)

Article 13, Legislative Decree No 472/1997

Reference (Italian only)

Article 5(6) of Legislative Decree No 471/1997

Reference (Italian only)

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