VAT identification represents, along with the appointment of a fiscal representative, one of the two alternative methods to register in Italy for a non-resident entity in order to fulfill its VAT obligations in Italy.
This procedure is available to EU-resident entities that choose to be directly identified for VAT purposes in Italy, as well as to non-EU entities resident in countries that have legal instruments ensuring mutual assistance in the field of indirect taxation (see Resolution No. 220/2003).
At present, only the United Kingdom and Norway have reciprocity agreements with Italy concerning VAT representation. This allows entities resident in these countries to opt for direct VAT identification in Italy, just like EU-resident entities. In the case of the United Kingdom, this arrangement has continued without interruption since the period prior to Brexit.
For further details on direct VAT identification for EU entities, please refer to our dedicated article.
EU-UK Agreement
Article 120 of the Protocol on administrative cooperation and combating fraud in the field of value added tax and on mutual assistance for the recovery of claims relating to taxes and duties – annexed to the EU–UK Trade and Cooperation Agreement of 24 December 2020 – provides that “the competent authorities of the Parties shall cooperate to ensure compliance with VAT legislation and for the recovery of claims resulting from duties and taxes.”
The scope and practical implications of this provision were clarified by the Italian Revenue Agency in Ruling No. 7/E of 1 February 2021, which stated that “the Protocol may be considered substantially equivalent to the administrative cooperation instruments currently in force within the EU. This circumstance allows the continued application, to UK taxable persons, of the provisions set out in Article 35-ter, paragraph 5, of the Italian VAT Decree (see also Resolutions No. 220/E of 5 December 2003 and No. 44/E of 28 July 2020).”
In conclusion, taxable persons established in the United Kingdom may access the direct VAT identification procedure in order to fulfill their VAT obligations and exercise their related rights in Italy, as an alternative to appointing a fiscal representative pursuant to Article 17, paragraph 2, of Presidential Decree No. 633/1972.
However, UK operators who already have a VAT representative or a VAT identification number in Italy, appointed or issued before 1 January 2021, may continue to use those existing arrangements for transactions carried out in Italy.
EU-Norway Agreement
As recalled by the Italian Revenue Agency in Resolution No. 44/E/2020, in 2018 the Agreement between the EU and Norway on administrative cooperation in the field of value added tax (VAT) was concluded with the aim of strengthening administrative cooperation, combating VAT fraud, and recovering VAT-related claims.
The agreement establishes a framework for collaboration between the tax authorities of EU Member States and Norway, with the objective of ensuring proper compliance with VAT legislation, providing mutual assistance, and safeguarding VAT revenue.
The Italian Revenue Agency clarified that the provisions of this agreement are substantially equivalent to those governing cooperation between the tax authorities of EU Member States in VAT matters and therefore satisfy the requirements set out in Article 35-ter, paragraph 5, of the Italian VAT Decree.
According to Article 35-ter, paragraph 5, of Presidential Decree No. 633/1972: “Non-resident entities engaged in business, artistic, or professional activities in another EU Member State or in a third country that has legal instruments providing for mutual assistance in the field of indirect taxation may use the direct VAT identification procedure provided for in this article.”
As a result, entities established in Norway may directly apply for an Italian VAT number in order to fulfill their VAT obligations and exercise their rights in Italy, as an alternative to appointing a fiscal representative.
Both the EU–UK and EU–Norway agreements have also introduced important changes regarding VAT refund procedures, differing from the ordinary process applicable to residents of non-EU countries.
