UK and Italy reach agreement on reciprocity for VAT refunds
8 May 2024| CATEGORIES: Brexit, Italy, VAT refund| TAGS: Brexit, Italy, VAT refund
The UK has concluded a bespoke reciprocal agreement with the Italian Government on VAT refunds. UK businesses not established in Italy will now be able to claim refunds of VAT paid on goods and services in Italy relating to their business activities under the EU’s 13th Directive process. UK businesses will not require a local tax representative to make the claims.
The agreement will have retrospective effect from 1 January 2021. Claims submitted on or after this date to the Italian Revenue Agency (Agenzia delle Entrate) will be considered valid. All claims for VAT refunds must meet the eligibility criteria and application requirements set out by the Italian tax authorities. For details on how to claim a VAT refund, visit the Agenzia della Entrate website.
The reciprocity agreement, which is in the form of exchange of notes signed on 31 January 2024 by the Embassy of Italy in London and on 7 February 2024 by the Embassy of the United Kingdom of Great Britain and Northern Ireland in Rome, is available here.
Background
Following the UK’s departure from the EU on 31 January 2020 – and after a transition period of 11 months – UK businesses no longer have access to the EU electronic cross-border VAT refund portal. As a result, from 1 April 2021 UK businesses have had to follow a different route to get VAT refunds from EU countries.
If a business is not established in the EU and is charged VAT on business activities in an EU country where it has not supplied goods or services, it may be entitled to have the VAT refunded by the authorities in that country.
How can UK businesses claim EU VAT refunds?
UK claimants must now send an application to the national tax authority in each EU country where VAT has been incurred.
Any EU country may:
- refuse to refund VAT in this way if the claimant’s country/territory does not grant reciprocal refund rights for VAT or similar to businesses based in that EU country;
- impose restrictions on the type of expenditure qualifying for refunds;
- insist that the claimant appoint a tax representative.
For further information on country specific rules on VAT refunds to non-EU businesses see the European Commission website.