Overlapping invoices and VAT deduction

The period between two fiscal years is always important in order to identify the moment VAT becomes deductible on overlapping invoices, especially because of the recent changes of the rules governing this matter.

In fact, the art. 14 of the Decree Law n. 119/2018 added a new period to art. 1, paragraph 1, of the Presidential Decree n. 100/98, according to which the VAT deduction on purchase invoices, noted by the 15th of the following month which the transaction has been carried out, may be deducted within the 16th of the following month. However, this new provision is not applicable to purchase invoices related to transactions carried out in a year whose invoices have been received by the client in the following year.

Considering that the date of receipt of the invoice by the client is crucial, it is necessary to briefly analyze the following cases:

  • invoices issued and received in 2018;
  • invoices issued in 2018 and received in 2019.

INVOICES ISSUED AND RECEIVED IN 2018

For operations whose VAT become payable in December 2018 and in the same year the client come into possession of the purchase invoices, VAT can be deducted alternatively:

  • with the VAT settlement of the month of December / fourth quarter 2018, after the annotation in the purchases register within 31.12.2018;
  • with VAT return related to 2018 (2019 VAT return), contributing to 2018 VAT balance. In this case, the invoice must be noted by 30.4.2019 in a special section of the VAT purchases register of 2018.

INVOICES ISSUED IN 2018 AND RECEIVED IN 2019

For transactions whose VAT became payable in December 2018 and the client receives the invoices during the following year, it is not possible to apply the new provision as described above, consequently VAT can be deducted:

  • with the VAT settlement of January 2019 / first quarter 2019 (to be carried out, respectively, by 16.2 and 16.5.2019) or of following months / quarters, after the annotation in the purchases register or, lastly,
  • with VAT return related to 2019 (2020 VAT return), contributing to 2019 VAT balance. In this case, the invoice must be noted by 30.4.2020 in a special section of the VAT purchases register of 2019.

All the above applies regardless of the format, paper / electronic, which the invoices are issued with.