2025 tough VAT Requirements for non-EU taxpayers with VAT fiscal representatives
Italy has published two new, stringent regulations affecting non-EU resident entities engaging in VAT activities through an Italian VAT representative. These changes, set out in two decrees issued on 4 December and 9 December 2024, impose enhanced compliance requirements to ensure greater transparency and adherence to VAT regulations. Businesses must comply with these regulations within 60 days of their release to avoid penalties. The changes cover: guarantee requirements of taxpayer; and obligations on the fiscal representative
Read more in our Italian VAT guide
Key Provisions of the New VAT Regulations
- Ethical and Professional Standards for VAT Representatives
Italian VAT representatives must now meet rigorous ethical and professional standards. Specifically:- Criminal and Tax Record: Representatives cannot have any criminal convictions or significant tax violations.
- Self-Declaration: They must submit a formal self-declaration to the Italian Revenue Agency affirming their compliance with these standards.
- Financial Guarantee Requirement
VAT representatives are required to provide a financial guarantee that remains valid for a minimum of 48 months. The amount of the guarantee will depend on the number of foreign entities represented. This measure aims to ensure that representatives can meet their VAT obligations on behalf of their clients. - Specific Requirements for Non-EU Entities
Non-EU entities performing intra-EU transactions face additional obligations:- VIES Registration Guarantee: A financial guarantee of at least €50,000 is required for registration in the VAT Information Exchange System (VIES). This guarantee must be valid for at least 36 months and can be provided in the form of state securities, bank guarantees, or surety bonds.
- Submission Process: Guarantees must be submitted to the provincial office of the Italian Revenue Agency, either directly by the non-resident entity or via their VAT representative.
- Penalties for Non-Compliance
Non-compliance with the new regulations will result in the automatic closure of VAT numbers or cancellation of VIES registration. Entities will have a 60-day grace period to rectify any issues before penalties are enforced.
Implications for Non-Resident Entities
The new regulations underscore Italy’s commitment to maintaining high standards of tax compliance and preventing VAT fraud. Non-resident entities, especially those outside the EU, must now navigate a more complex regulatory landscape, including:
- Ensuring their chosen VAT representative meets the stricter ethical and financial requirements.
- Preparing the necessary financial guarantees to secure VAT registration and compliance.
These changes highlight the importance of proactive planning and engagement with qualified tax professionals to mitigate risks associated with non-compliance. Businesses are advised to familiarise themselves with the full scope of these regulations and take prompt action to meet the 60-day compliance deadline.
