Digital Communication To The Italian Tax Authority For VAT Relevant Exchanges Over Euro 3,000.00

INDEX

1 INTRODUCTION

With the measure of the Italian Tax Authority dated December 22^nd 2010, a new digital communication has been introduced in the Italian regulatory system for all exchanges relevant for the Value Added Tax (VAT) equal or exceeding the amount of 3,000.00 Euro, as foreseen by the art. 21 of the Law Decree no.78/2010 turned into the Law no. 122/2010.

2 SUBJECTS OBLIGED TO THE COMMUNICATION

This new communication is mandatory for all VAT subjects which executing exchanges relevant for the Italian VAT.

3 OBJECT OF THE COMMUNI-CATION

Exchanges of goods and services, delivered and received, with gross amounts (excluding VAT) equal or exceeding to 3,000.00 (three thousands) Euros, must be included in this new communication.

For all exchanges relevant for VAT but with no obligation of invoicing, the above mentioned limit is increased to 3,600.00 Euros (without considering VAT); they are most of all those operation where the purchaser is the final consumer (not VAT subject).

Recording and performing time

To identify exchanges to be included in the communication the tax payer must refer to:

• Recording/registration time (in corporate VAT books);
• Or, if outstanding, at time of exchange's performance.

3.1 PARTICULAR CASES

Under specific agreements:

• General contract, supply, administration, and all the other agreements producing periodical compensations, the new communication becomes compulsory only if periodical amounts due within the year are equal or exceed 3,000.00 Euros;
• Linked together, for the limit of 3,000.00 Euros all compensations and amounts agreed must be considered as one.

3.2 EXEMPTED OPERATIONS

The below exchanges are excluded from the new communication:

• import;
• direct exports, even in under triangulations or with goods' delivery in Italy to a non-resident customer;
• sales and purchases toward economic operators with offices, legal address or domicile in tax heavens;
• operations that are already object of compulsory communication to the Italian Tax Authority (i.e. insurance services, electric energy supply, etc.).

Exchanges within April 30^th 2011.

Exchanges put in place within April 30^th 2011, relevant for VAT but for which invoicing is not compulsory, are exempted from the new communication.

3.3 HOW TO FILE THE COMMUNICATION

Communication must be filed, for every exchange, with the following elements:

• referring year;
• VAT identification number or, when not available, the seller's and purchaser's tax codes;
• Amounts due and VAT, or the appropriate specification if the exchange is excluded or exempted;
• Amounts due, including VAT, if they refer to exchanges VAT relevant but with invoicing obligation.

4 GRADUAL APPLICATION

With the aim of granting a gradual introduction of this new fulfillment and ensure, at the same time, the availability of all information needed to fight tax evasions and fraud chances, for the tax year 2010:

• The 3.000,00 and 3,600.00 Euro limits mentioned at the above point no.3 are increased at 25,000.00 (twenty-five thousands) Euro;
• The new communication is mandatory just for exchanges subject to invoicing.

5 DEADLINES FOR COMMUNI-CATION'S SUBMISSION

For the tax year 2010 the deadline for its submission to the Italian Tax Authority is October 31^st 2011.

The electronic communication related to tax years from 2011 on, has to be submitted to the Italian Tax Authority within April the 30^th of the following year.

6 EQUIVALENT COMMUNICA-TION

Within 30 days subsequent to the deadline foreseen for the original communication, it's admitted to submit an equivalent communication replacing the one already submitted with the aim of amending any mistake or omission.

In order to consider this equivalent communication valid:

• It must refer to the same period of the original communication;
• The old/original one must be revoked.

7 SUMMARY PICTURE

Summarizing:

• For the tax year 2010 the two limits of 3,000.00 and 3,600.00 euro are increased at 25,000.00 euro and the new communication is mandatory just for exchanges subject to invoicing;
• From January 1^st 2011 to April 30^th 2011 the communication is mandatory just for exchanges subject to invoicing for amounts over 3,000.00 Euros (VAT excluded);
• From May 1^st 2011 on, the communication will be compulsory for all exchanges VAT relevant:

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.