Reciprocity Agreement: On February 7, 2024, Italy and the United Kingdom signed a reciprocity agreement for VAT refunds. This agreement allows Italian traders to claim VAT refunds for purchases made in the UK, and British traders to claim VAT refunds for purchases made in Italy. The agreement is retroactively effective from January 1, 2021.
Thirteenth Directive: Claims for VAT refund submitted by Italian/British traders will now be regulated by the Thirteenth Council Directive 86/560/EEC. This directive outlines parameters for refunding VAT to taxable persons not established within the European Union (EU) territory.
Claim Process in Italy:
- Traders from the UK seeking VAT refunds for purchases made in Italy need to submit an application form called “Modello 79.”
- The form can be drafted in Italian or English and must be submitted quarterly or annually.
- It should be filed in hardcopy with the Italian Tax Authorities or submitted via hand delivery, post, or express courier.
- The submission deadline is September 30 of the year following the relevant purchases.
- The refund request must be at least €400 (for quarterly requests) or €50 (for annual requests).
- Specific documents, including original invoices and proof of payment, must accompany the application.
- The assessment process takes up to six months (or eight months if additional information is requested).
- Approved refunds are paid within 10 working days.
- Interest (2% per year) applies after 180 days from the application.
- A maximum of five applications can be submitted annually.
Undue Refunds and Penalties:
- If a trader receives an undue VAT refund, the Italian Tax Authorities issue a recovery order.
- The recipient must repay the refund within 60 days.
- An administrative penalty (ranging from 100% to 200% of the refunded amount) may apply.
Remember that claims submitted by extra-EU entities are valid if the applicant can prove their VAT subject status in their country of establishment.
