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VAT direct identification system in Italy still accessible to UK entities post-Brexit

On February 1st 2021 the Italian Tax Authority issued Resolution no. 7, 2021 (“Resolution”) which states that following Brexit, taxpayers based in the United Kingdom (“UK Taxpayers”) previously registered in Italy for VAT purposes under the direct identification system (i.e., obtaining an Italian VAT number, “Direct Registration”), may continue to use it to fulfill their obligations and exercise their VAT rights as an alternative to the appointment of the tax representative in Italy.

Based on the Resolution, UK Taxpayers:

  • without an Italian VAT number, can register for VAT in Italy by the Direct Registration or the appointment of a tax representative established in Italy and with an Italian VAT number (“VAT Representative”);
  • that have previously applied for the Direct Registration can continue doing business in Italy by using their Italian VAT number (the switch to the VAT Representative not being required);
  • that had previously appointed the VAT Representative may continue doing business in Italy in the same manner.

According to the Italian VAT Law (i) both the Direct Registration and the appointment of the VAT Representative in Italy do not modify the legal status of UK Taxpayers as foreign subjects and (ii) the supply of goods, has had its status changed from an Intra EU transaction to an Extra EU transaction due to Brexit. Therefore, since January 1st, 2021, UK Taxpayers carrying out business activities with companies based in Italy may face problems with the amount of VAT owed for introducing goods in Italy (i.e. importation) and their entitlement to recover it.

The process for registering a company based in the United Kingdom for VAT in Italy involves providing a series of documents (i.e. a specific form, some original certificates issued by the United Kingdom Authorities regarding the company status, to be apostilled and translated into Italian, etc...) to the referring Italian tax office and might require over a month for the Italian VAT number to be obtained. Furthermore, eventual delay can-not be excluded due to the increase of the applications following Brexit.