Investment in Italy
Investment in Italy
Investment in Italy
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<strong>Investment</strong> <strong>in</strong> <strong>Italy</strong>The reverse charge procedure applies to the transfer of <strong>in</strong>dustrial real estate if the supplierhas opted for VAT or the customer is a partially exempt bus<strong>in</strong>ess person.8.11Head-office and branch transactionsIn light of the judgment <strong>in</strong> the FCE case (C-210/04), the Italian tax authorities have clarifiedthat services rendered between a head office and its branch are disregarded for VATpurposes (on condition - as po<strong>in</strong>ted out by the ECJ judges - that the branch has no decisionalautonomy).8.12Bad debtsVAT relief can be claimed for bad debts only if they are due to a customer’s bankruptcy or<strong>in</strong>solvency.8.13Anti-avoidanceThere is no general anti-avoidance rule for VAT purposes; there are, however, certa<strong>in</strong> specificanti-avoidance provisions.Accord<strong>in</strong>g to the Italian Supreme Court, should a taxpayer make obviously uneconomictransactions <strong>in</strong> such a way that VAT is not due, the tax authorities are allowed to reclassifythe transactions and claim VAT. Therefore, a taxpayer should always be <strong>in</strong> a position to provethe economic value of his transactions; otherwise they might appear to be made with thesole purpose of obta<strong>in</strong><strong>in</strong>g an undue tax advantage.In this respect the Italian tax authorities have clarified that the pr<strong>in</strong>ciples set forth <strong>in</strong> theHalifax ECJ decision should also apply for Italian VAT purposes.A rule to combat miss<strong>in</strong>g trader <strong>in</strong>tra-Community fraud, also known as carousel fraud, is<strong>in</strong> force <strong>in</strong> <strong>Italy</strong>, establish<strong>in</strong>g that the purchaser has jo<strong>in</strong>t liability for VAT not paid by theseller. This anti-fraud rule only applies to a limited series of goods (cars, motorcycles, mobilephones, computers, live stock, and fresh meat) and is only triggered when the price is lowerthan the market value.Specific anti-avoidance provisions exist whereby the fair market value becomes the taxablebasis <strong>in</strong> certa<strong>in</strong> transactions between related parties which are partially exempt.8.14 Penalty regimeThe VAT penalty regime can be categorised accord<strong>in</strong>g to the type of violation committed bythe taxpayer, as described below.82© 2012 KPMG S.p.A., KPMG Advisory S.p.A., KPMG Fides Servizi di Amm<strong>in</strong>istrazione S.p.A., KPMG Audit S.p.A., Italian limited liability share capital companies, and Studio Associato Consulenza legale e tributaria, anItalian professional partnership, are member firms of the KPMG network of <strong>in</strong>dependent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.