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Milan, January 24th , 2011

Re: News on VAT from 2011
Dear customers,
We are glad to inform You that the administration has introduced some novelties on VAT
procedures, that will be effective from 2011 on. These variations concern in particular:

Altri uffici nel mondo: Austria, Bielorussia, Bosnia-Herzigovina, Brasile,                      Partners in Milano:
Bulgaria, Cina, Croazia, Emirati Arabi Uniti, Estonia, Francia, Germania,
Gran Bretagna, Hong Kong, India, Indonesia, Kuwait, Lettonia, Lituania,                         Avv./RA Stefan Brandes
Moldavia, Oman, Polonia, Qatar, Repubblica Ceca, Repubblica Slovacca,                           Dott. Giampiero Guarnerio
Romania, Russia, Singapore, Slovenia, Spagna, Sud Africa, Svezia, Svizzera,                     Avv. Massimiliano Perletti
Tailandia, Turchia, Ucraina, Ungheria, USA, Vietnam                                             Dott. Francesco Bocci
                                                                                                Dott. Christian Siccardi
UniCredit Banca, Ag. 3281 - Milano                                                              Dott.ssa Antonella Bisestile
C/C 1013620, ABI 2008, CAB 1661                                                                 Avv. Rita Santaniello
Swift-Code (BIC): UNCRITB1OU1                                                                   Avv. Eugenio Bettella
IBAN : IT 62 R 02008 01661 000001013620

P.I. (V.A.T.) IT 12609300152
Reverse charge for mobile communications
By a Decision (22nd November 2010), the Council of the European Union gave authority to Italy to
extend to 31st December the reverse charge1 to the mobile communications (mobile phones and
their attachments) and to IC devices (e.g microprocessors and central processing units, before
they’re installed for the employment). There aren’t amount limits to the enforcement of the reverse
charge, therefore it will be extended to every assignment of benefits in favour of passive subjects,
regardless of the purchase value. As for the starting date, the new regulations will be effective 60
days after 25th November 2010, that is the date of the publication of the Official Gazette of the
European Union and of the coming into force of the new procedures. After that, the reverse charge
will be enforceable to the assignments carried out from 1st April 20112 (Cfr. Newsletter 59/E, 23rd
December 2010).
In case of violation of the liabilities connected to the reverse charge, an administrative sanction
between 100% and 200% of the due VAT is expected, with a minimum of 258 Euros.

New restrictions to the settlements
As anticipated in the newsletter concerning the Summer Manoeuvring 2010, from 1st January 2010
on, in presence of debts for revenue taxes that are on payroll and out of order, for amounts of more
than 1.500 Euros, the prohibition of the setoff in the F24 form of the entire amount of the revenue
taxes, including the VAT credit, is expected until the payroll taxes are paid. The prohibition will be
effective since the issuing of the ministerial decrees concerning the terms of payment of the payroll
taxes by setoff, provided that the setoff doesn’t get in the way of the necessary credits, useful for the
payment of the payroll tax. From the operative point of view, if a taxpayer has a countervailable
VAT credit of 8.000 Euros and a debt on payroll of 2.000 Euros, the following solutions are
    -    until the ministerial decree won’t be effective, it’ll be possible to offset up to 6.000 Euros. If
         the taxpayer offsets the entire amount of 8.000 Euros, he will be punished with a sanction of
         1.000 Euros, that is the 50% of the amount of the debts on payroll, up to the entire amount
         unjustly offset;

  The financial institution 2007 integrated paragraph 6 Art. 17 DPR 633/72, in order to contrast carousel frauds in range
of VAT procedures. It extended the reverse charge to the disposal of mobile phones and attachments. Notwithstanding
that, the very regulation became enforceable, only under authorization of the European Union, that intervened by the
Decision of November 2010.
  This date is considered reasonable, because the 60 days quoted are the deadline, after which the new directions are
applied. It takes also in consideration the needs of the involved taxpayers, e.g. relevant modifications in the
management procedure

   -   since the coming in to force of the ministerial decree one must offset the 2.000 Euros debt at
       first, so that the remaining 6.000 Euros will be available. If the amount will be offset,
       without having extinguished the debt, a sanction equal to 50% is expected.
   Considering these aspects and the normative changes of the last years, please find as follows a
   recap on the directions of use of the VAT credit:
   1) VAT credit with VAT debt: in order to use the VAT credit 2010 for the allowance of the
       debts that result from the periodical VAT settlements 2011, there aren’t bonds as regards the
       amount, or other formalities. This happens either when the offset is carried out internally, or
       when it’s carried out in the F24 form.
   2) Residual VAT credit 2009 (code 6099 year 2009): horizontal offsetting of the VAT credit
       of the year 2009 is ready from 1st January 2011, if the VAT statement is sent in within 30th
       September 2010 together with the stamp of approval (or without stamp of approval for
       amounts up to 15.000 Euros). The offset of the excess of the year 2009 can be carried out as
       far as the VAT statement 2011 is sent in.
   3) Offsetting of the VAT credit up to 10.000 Euros: for the annual amounts up to 10.000
       Euros the offset of the VAT credit 2010 is free from formalities and terms.
   4) Offsetting of the VAT credit between 10.001 and 15.000 Euros: horizontal offsetting of
       the VAT credit 2010 in the considered span of time is only possible from the 16 th of the
       month following the lodgement of the VAT statement (even without stamp of approval)
       only by Fisconline and Entratel.

Authorization regime for intra-community operations
For intra-community assignments and purchases of benefits, subjects have to express the wish of
doing intra-community assignments/purchases:
 together with the announcement of the activity’s start-up;
 with a special motion in free-form, for subjects in possession of VAT number.
This obligation, introduced by the Summer Manoeuvring 2010, is managed by two measures of the
Italian Internal Revenue Agency (29th December 2010) related to:
 the terms of denial or retraction of the authorization, necessary in order to carry out intra-
   community assignments and purchases of benefits;
 the criteria and terms needed for the inclusion of the economic operator in the files of the passive
   subjects who carry out intra-community assignments and purchases of benefits (VIES database).

From a practical point of view, intra-community operations can be carried out 30 days after the
assignment of the VAT number, unless the Internal Revenue Agency denied the authorization
within that date. In particular, the denial passes in case the data check is negative and/or after the
analysis of the objective and subjective risks of the petitioner. The elements of risk considered by
the Internal Revenue Agency are, for example, the type of activity carried out and the risk of tax
evasion connected, the fiscal habits of the taxpayer and the relations to a third party, who is
involved in tax evasions. The denial (and/or the retraction) passed are impugnable:
 in front of the competent provincial Tax Commission;
 within 60 days from the date of the notice, also sent per ordinary mail.
The Financial Management includes the passive subject in the file of the authorized subjects that
can carry out intra-community assignments and purchases of benefits, 30 days after that the VAT
statement is sent in, without denial of authorization. For the subjects that are already present in the
file, in the six months that follow the declaration, the Internal Revenue Agency examines the
position of the operator and can leave the operator out of the file.

By February 28th, 2011, the subjects who have presented the activity’s start-up declaration from
May 31st, 2010 will be excluded from the file of the subjects authorized to carry out intra-
community operations:
 if they have not expressed the will to make intra-community operations, by crossing the
   appropriate boxes foreseen of AA7 or AA9 forms;
 if in the second semester 2010 they don’t have in any case carried out intra-community
   operations and fulfilled the INTRASTAT liabilities.
Given such hypothesis, if one intends to carry out intra-community operations, it is possible to
request the inclusion in the archive of authorized subjects, presenting an appropriate application
directly to the Internal Revenue Agency (by January 29th, 2011, if one wants that the 30 days pass
before February 28th, 2011).
By February 28th, 2011, subjects which have presented the declaration of the activity’s start-up
before May 31st, 2010 will be excluded from the file of subjects authorized to carry out intra-
community operations:
 if they have not presented the INTRASTAT forms regarding assignments of goods and services
   and intra-community acquisitions of goods and service of the years 2009 and 2010;

 even if, with the INTRASTAT forms, they have not fulfilled the VAT declaration liabilities for
   the year 2009.
Also in these cases, the subjects that intend to carry out intra-community assignments or purchases
can ask to be included in the file through a special request that have to be presented directly to the
Internal Revenue Agency in free form.

Fairs territory
From January 1st, 2011 the criterion of localization of the supply of services related to cultural,
artistic, scientific, educational activities, sports and entertainment, and also fairs and exhibitions
(Art. 7-quinques DPR 633/72) has changed.
In the previous formulation of the Article, in force until December 31st, 2010, these services were
considered as made in the territory of the State, only if effectively carried out in Italy. The
criterion objectively regulated any services as said above, regardless of the customer’s status,
therefore as well in case he should be a passive subject as well as a private consumer.
In the Article 7-quinques replaced from January 1st, 2011 by Article 3, sub-paragraph 1 of the
D.Lgs. n.18/2010, the splitting of the services’ categories as previously detected is expected:
   -       on one side, cultural services, as well as artistic, scientific, sports related, educational,
           entertainment and similar activities, fairs and expositions, services of said activities’
           organizers, service duties for the access to cultural, artistic, scientific etc.
   -       events (i.e. entrance tickets) and to the additional services (i.e. wardrobe service).
   -       On the other side, access services to cultural, artistic, sports related, scientific,
           educational, entertainment events and similar activities, fairs and expositions therein
           included, as well as to additional services connected to the access, considered as made
           within the National territory only if actually carried out in Italy.
   With the new regulation, for this kind of services given to passive subjects there’s a
   modification of the general rule of the tax location, for which there’s a shift from the tax
   criterion of the place of execution to the tax criterion in the customer’s country of residence. On
   the contrary, for services given to private consumers one confirms, as a general rule, the one of
   the taxation in the lender’s country.

   To sum up:

                                       Until December 31st, 2010          From January 1st, 2011
                                                                       Customers           Customers
                                                                       Passive subjects    Non-passive
Supply of services during fairs Taxable in the territory in which In                  the In the territory
and    exhibitions,   organizers’ they effectively are carried out     customer’s          in which they
services, additional services                                          territory           are effectively
                                                                                           carried out

Supply of services for the access Taxable in the territory in which Taxable in the territory in which
to events as well as to the related they effectively are carried out   they effectively are carried out
additional services

We remain at your disposal for any further information.

Best regards.

          Dott.ssa Rita Cretti                                                     Dott.ssa Laura De Lisa
      Certified Public Accountant


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