Italy To Extend VAT Split Payment Mechanism For B2G Supplies

by Ulrika Lomas, Tax-News.com, Brussels

31 July 2020

On July 24, 2020, a Council Implementing Decision was published in the official journal of the European Union authorizing the extension of Italy's value-added tax split payment mechanism scheme, applicable to contracts with public sector entities.

The mechanism, introduced in 2017, is an anti-tax evasion measure that requires government departments to pay the VAT payable under a contract directly to the state, rather than to the supplier.

The Italian Government applied for the scheme to be extended but with a narrower scope, in a letter registered with the Commission on December 4, 2019. However, in a letter registered on March 27, 2020, Italy requested that the scheme be extended in its existing form.

The Implementing Decision allows Italy to extend the scheme until June 30, 2023.

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