No simplification on the guarantee for the VAT refund of an Italian PE
An Italian PE submitting a VAT refund cannot benefit from the simplifications on the guarantee. This is the answer given by the Revenue Agency to ruling no. 42, which clarified the requirements for the submission of the VAT refund request by an Italian permanent establishment of a non-resident subject, establishing in this regard that it is necessary to follow the ordinary rules (according to article 38bis of Presidential Decree 633/1972).
The ruling applicant is an Italian PE of a non-resident entity, controlled by a sub-holding which is in turn controlled by a non-resident holding company. The PE in question asked for clarifications to the Revenue Agency concerning the correct interpretation of art. 38bis of Presidential Decree 633/1972, with particular reference, with regard to VAT refund requests: i) to the possibility of not presenting any guarantee if the shareholders’ equity has not decreased by more than 40% and ii) to the possibility, granted to groups whose equity resulting from the consolidated financial statements exceeds 250 million euros, to provide guarantees through the direct assumption by the parent company of the obligation to fully repay the sum to be refunded.
On the first point, the Revenue Agency clarified that the applicant, as a PE, doesn’t prepare a financial statement and, therefore, there is no equity to which refer. However, as a consequence of the principle of according to which, for VAT purposes, the PE and non-resident parent company are the same entity (already addressed by the EU Court of Justice in a judgment issued on Marc 23rd, 2006), the requirement of the non-decrease in equity must be verified to the parent company and certified by the PE through a substitute declaration. The latter should be prepared according to the rules applicable in the event of a VAT refund request presented by a non-resident subject with an Italian fiscal representative.
On the second point, the Revenue Agency clarified that by virtue of the subjective consistency between the PE and the non-resident parent company, the possibility for the parent company to provide a guarantee by assuming the payment obligation is excluded. In such case, in fact, there would be no third-party equity in addition to the one related to the entity requesting the refund. Furthermore, the Revenue Agency specified the impossibility also for the sub-holding company to assume the payment obligation. In fact, the applicability of the simplification envisaged for groups is subordinated to the equity value resulting from the consolidated financial statement prepared pursuant to art. 25 of Legislative Decree 127/1991 and since the sub-holding in question is not an Italian resident entity, the aforementioned art. 25 is not applicable. Therefore, the only possibility for the PE is to provide guarantees in the ordinary forms, i.e. for example by means of a bank guarantee or a policy issued by an insurance company.
Lastly, it should be noted that the clarifications provided by the Revenue Agency refer to the specific case under ruling, where the non-residence circumstance connected with the whole group represents the main reason for the non-application of the simplifications analyzed. Their applicability in the event of a VAT refund request presented by an Italian PE should therefore be examined on a case-by-case basis.
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