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11 October 20232 minute read

8th Directive VAT refund not allowed in the presence of a Fixed Establishment in Italy

The issue came from the refusal of the Italian Tax Authority to refund the VAT paid by a non-resident entity in relation to input transactions carried out directly in Italy even without the involvement of its Italian FE.

In this case, the Italian Supreme Court upheld the Italian Tax Authority’s refusal, stating that the VAT refund procedure could only be activated by non-resident entities with no establishment in Italy for VAT purposes, according to the rules set forth by the 8th VAT Directive (Directive 2008/9/EC).

The Supreme Court reaffirmed a principle already expressed by the CJEU (case C-244/08) according to which the procedure for recovering input VAT – through the ordinary VAT recovery procedure or through the filing of a VAT refund request – depends on the place of establishment of the VAT taxable person.

Therefore, a taxable person with a FE in Italy must, for that reason, be considered established in Italy and must proceed to recover input VAT paid on purchases made in Italy according to local VAT rules; the VAT refund procedure being available only to non-established taxable persons without a FE in the country where the application is filed.

In accordance with the CJEU (case C-244/08), the Italian Supreme Court concludes that the criterion operates irrespective of whether the purchases or imports carried out in Italy were made through the Italian FE or directly from the non-resident company.



Having an FE in Italy implies that Italian input VAT must be recovered according to ordinary rules through the FE, regardless of its involvement in the input transaction. It should be borne in mind that under Italian VAT rules, annual VAT credit could be alternatively (i) carried forward to the following year, (ii) offset against other tax debts (within the annual thresholds) or (iii) claimed for refund (only if specific conditions are met).


Reference: Italian Supreme Court, Judgment No. 25685 of 4 September