The Italian tax authorities published implementing regulations on 14 and 17 April 2025 that set out the requirements for appointing a VAT representative in Italy and for conducting intra-EU transactions via the representative that require inclusion in the VAT Information Exchange System (VIES) database. The guidance follows two Ministerial Decrees released at the end of 2024, which tighten the rules governing the appointment of VAT representatives and registration in the VIES database (for prior coverage see the article in the January 2025 issue of Indirect Tax News). The decrees did not become effective until the tax authorities issued the implementing rules.
A nonresident carrying out taxable supplies in Italy may appoint a VAT representative to act on its behalf provided the nonresident does not have a fixed establishment for VAT purposes in Italy. The 2024 decree sets out the requirements that a VAT representative must meet, including a representation that the VAT representative complies with ethical and professional standards and a guarantee based on the number of represented taxpayers.
Declaration of Eligibility
The implementing regulations require a proposed (and existing) VAT representative to submit a declaration that demonstrates its eligibility to act as a representative. This declaration must be submitted directly to the competent Provincial Directorate of the Italian tax authorities in the place where the tax representative is domiciled for tax purposes at the same time it submits documentation about the commencement of activities in Italy or when updating VAT registration details. The declaration must confirm that the VAT representative has not been convicted, sentenced or have pending criminal proceedings for financial crimes; has not committed serious and repeated violations of the tax and/or contributions laws; and not be ineligible or unable to hold certain offices.
Guarantee
The financial guarantee must be valid for at least 48 months. It can be provided in the form of a bond in government securities, surety policy or bank guarantee, with the amount based on the number of represented subjects and ranging from EUR 30,000 to EUR 2 million (the amount has not changed from the terms of the relevant decree). If a legal entity is the VAT representative, the entity must provide the guarantee and the eligibility declaration must be provided by all representatives. A guarantee is not required if only a single entity is to be represented (however, the eligibility declaration still must be submitted). A new guarantee is required if there is an increase in the number of represented subjects, resulting in a higher bracket. The guarantee must be delivered in person to the competent Provincial Directorate.
Existing Tax Representatives and Penalties for Noncompliance
Persons functioning as tax representatives as at 17 April 2025 must submit the eligibility declaration and, if required, the guarantee within 60 days (i.e., by 16 June).
Failure to comply with these requirements may result in the automatic termination of the VAT numbers of the represented subjects. In the event of noncompliance, an additional 60-day period will begin to run from the date the Italian tax authorities notify the parties of the violation. The tax representative can submit the declaration and guarantee during this period. If the documents are not submitted by the end of the additional period, the VAT numbers of the represented subjects will be terminated. An administrative monetary penalty may also be imposed.
The VIES is an electronic database maintained by the European Commission that allows businesses to verify the validity of VAT identification numbers of their customers and suppliers issued by EU member states in cross-border transactions.
The 2024 decree provides that non-EU resident taxable persons that have a VAT representative will be required to provide to the Italian tax authorities a guarantee of at least EUR 50,000 in one of the above-mentioned forms that will be valid for at least 36 months in cases where the nonresident taxable person wishes to be registered in the VIES database. Once the 36-month period expires, the taxable person will be free to operate without the guarantee. The new implementing regulations provide that:
Nonresident entities already included in the VIES database as at 14 April 2025 must provide the guarantee within 60 days after 14 April 2025 (i.e., by 13 June 2025). Failure to do so could result in the Italian tax authorities notifying the tax representative that they are initiating the procedure to remove the represented entity from the VIES database. As in the case of the other guarantee, the VAT representative will have an opportunity to correct the violation, failing which the represented entity’s VAT number will be removed from the VIES database.
The implementing regulations will have a direct impact on nonresident VATable persons engaging carrying out supplies in Italy and will increase their compliance burden. Affected nonresident entities should become familiar with the new regulations, ensure that their VAT representative meets the eligibility requirements and that a guarantee is provided where necessary.
Francesco Grandolfo
BDO in Italy
Appointment of VAT Representative
A nonresident carrying out taxable supplies in Italy may appoint a VAT representative to act on its behalf provided the nonresident does not have a fixed establishment for VAT purposes in Italy. The 2024 decree sets out the requirements that a VAT representative must meet, including a representation that the VAT representative complies with ethical and professional standards and a guarantee based on the number of represented taxpayers.Declaration of Eligibility
The implementing regulations require a proposed (and existing) VAT representative to submit a declaration that demonstrates its eligibility to act as a representative. This declaration must be submitted directly to the competent Provincial Directorate of the Italian tax authorities in the place where the tax representative is domiciled for tax purposes at the same time it submits documentation about the commencement of activities in Italy or when updating VAT registration details. The declaration must confirm that the VAT representative has not been convicted, sentenced or have pending criminal proceedings for financial crimes; has not committed serious and repeated violations of the tax and/or contributions laws; and not be ineligible or unable to hold certain offices.
Guarantee
The financial guarantee must be valid for at least 48 months. It can be provided in the form of a bond in government securities, surety policy or bank guarantee, with the amount based on the number of represented subjects and ranging from EUR 30,000 to EUR 2 million (the amount has not changed from the terms of the relevant decree). If a legal entity is the VAT representative, the entity must provide the guarantee and the eligibility declaration must be provided by all representatives. A guarantee is not required if only a single entity is to be represented (however, the eligibility declaration still must be submitted). A new guarantee is required if there is an increase in the number of represented subjects, resulting in a higher bracket. The guarantee must be delivered in person to the competent Provincial Directorate.
Existing Tax Representatives and Penalties for Noncompliance
Persons functioning as tax representatives as at 17 April 2025 must submit the eligibility declaration and, if required, the guarantee within 60 days (i.e., by 16 June).
Failure to comply with these requirements may result in the automatic termination of the VAT numbers of the represented subjects. In the event of noncompliance, an additional 60-day period will begin to run from the date the Italian tax authorities notify the parties of the violation. The tax representative can submit the declaration and guarantee during this period. If the documents are not submitted by the end of the additional period, the VAT numbers of the represented subjects will be terminated. An administrative monetary penalty may also be imposed.
VIES Obligations
The VIES is an electronic database maintained by the European Commission that allows businesses to verify the validity of VAT identification numbers of their customers and suppliers issued by EU member states in cross-border transactions. The 2024 decree provides that non-EU resident taxable persons that have a VAT representative will be required to provide to the Italian tax authorities a guarantee of at least EUR 50,000 in one of the above-mentioned forms that will be valid for at least 36 months in cases where the nonresident taxable person wishes to be registered in the VIES database. Once the 36-month period expires, the taxable person will be free to operate without the guarantee. The new implementing regulations provide that:
- The tax representative must submit the guarantee to the competent Provincial Directorate (based on the tax representative’s tax domicile);
- The guarantee must contain the following information:
- Details of the party applying for inclusion in the VIES database;
- Details of the party acting as a surety for the bank/insurance company providing the guarantee;
- Details of the competent Provincial Directorate;
- Duration and amount of the financial guarantee, as well as any limits; and
- Obligations of the contracting parties and consequences of default, as well as any waiver of prior enforcement and subrogation and contract terms on disputes that end up in court.
Nonresident entities already included in the VIES database as at 14 April 2025 must provide the guarantee within 60 days after 14 April 2025 (i.e., by 13 June 2025). Failure to do so could result in the Italian tax authorities notifying the tax representative that they are initiating the procedure to remove the represented entity from the VIES database. As in the case of the other guarantee, the VAT representative will have an opportunity to correct the violation, failing which the represented entity’s VAT number will be removed from the VIES database.
BDO Insights
The implementing regulations will have a direct impact on nonresident VATable persons engaging carrying out supplies in Italy and will increase their compliance burden. Affected nonresident entities should become familiar with the new regulations, ensure that their VAT representative meets the eligibility requirements and that a guarantee is provided where necessary.Francesco Grandolfo
BDO in Italy