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7 September 20232 minute read

VAT liability for Italian fixed establishments: a case-by-case analysis


This was clarified by the Italian Tax Authority in Ruling No. 374/2023 regarding an Italian fixed establishment (FE) of a Dutch company within a Brazilian international group.

While the Dutch company, through its head office in the Netherlands and its Brazilian subsidiary, managed sales and purchases agreements, the Italian FE played a role in managing customer inquiries, orders, stocks and deliveries, as well as contributing to the development of new products and quality control through seven employees based in Italy.

According to Article 17, par. 4 of the Italian VAT Decree (transposing Article 192-bis of the EU VAT Directive) and Article 53 of the Reg. UE 282/2011 when a non-resident entity has a FE in Italy, it is considered a VAT taxable person with respect to all transactions in which it is involved.

That said, the Italian Tax Authority had already clarified (see Ruling No. 57/2023) that mere administrative support functions were not sufficient to consider that the FE was involved in the transaction.

In the present case, although the Italian FE did not directly negotiate contracts for the sale and purchase of the products, the Italian Tax Authority concluded that the complex role played by it influenced the business carried on by the Group such that it had to be considered being involved in the transactions carried out in Italy. Therefore, the Italian FE was found liable for VAT with regard to the supply of goods and services carried out in Italy.


Key takeaway

This position of the Tax Authorities confirms that the involvement of an Italian FE in the supply of goods or services must be analysed on a case-by-case basis to correctly identify whether the place of supply is in Italy.


Reference: Italian Tax Authority, Ruling No. 374 of 10 July