Extension of the split payment to June 30th 2023: the MEF press release has been published

With press release n. 158 of July 3rd 2020, the Ministry of Economy and Finance (MEF) has officialised the extension of the split payment mechanism until June 30th 2023, and the decision will be formally adopted and published in the Official Journal of the European Union once translated in every official languages ​​of the European Union.

The split payment mechanism continues to apply to the transactions with public administration and other entities in accordance with the provisions of article 17-ter of the decree of the President of the Republic of  October 26th 1972, n. 633.

The split payment mechanism, which provides that VAT has to be paid directly by the client to tax authorities, is a measure that derogate from the ordinary mechanism of VAT and as such requires the authorization of the European Union Council. This authorization was first granted to Italy with decision no. 1401/2015 and, with decision no. 784/2017, the final application was set for June 30th 2020.

The request for extension was promoted by Italy with a registered letter dated 4 December 4th 2019 and confirmed by the European Commission with document (COM (2020) 242 final) of June 22nd 2020. This document not only approved the extension but, given its importance and the potential shortage of immediate liquidity for the companies that has to apply it, but also provides that Italy within September 30th  2021 has to report on the general situation of VAT refunds and on the average duration of the reimbursement procedure as well as on the effectiveness of this procedure and other measures implemented to reduce tax evasion in the sectors concerned.

 

Marco Cerutti