A recent Circular Letter (no 5/2012) issued by the Italian Tax Authorities has provided some much needed clarification on their position when it comes to the place of storage of VAT invoices and other VAT records for Italian business persons.
In the Circular Letter – a document that states a position on an issue, the Italian Tax Authorities have taken an alternative position to other VAT Authorities in the EU. The Italians have stated that the e-archiving of VAT records outside of Italy or its territories for VAT purposes is allowed only when:
Electronic invoices issued in accordance with the client’s agreement according to art. 39 of Presidential Decree no. 633/1972;
electronic invoices issued without the client’s agreement and sent by paper, which are then e-archived (e-archiving carried out according to specific Italian provision, i.e. d.m. January 23, 2004)
The restriction announced by the Italians about the place of storage does not apply to EU taxable persons who are VAT registered in Italy via direct VAT identification – they continue to be allowed to keep VAT documentation outside Italy.
E-archiving or electronic storage is common place for many VAT records and is most commonly in the form of;
- VAT invoices
- Official, commercial or supplementary evidence for importations
- Official, commercial or supplementary evidence for exports
The position is unlikely to be followed by any other of the EU Tax Authorities such as the UK, Germany or the Netherlands who are keen to promote International trade and attract more inward investment from places outside of its own territory. Just how many US or Asian businesses would operate on this basis remains to be seen, but it is another obstacle to overcome when considering to do business with Italy – would the associated costs and VAT compliance burden outweigh the commercial benefits of trading in Italy?
The move will certainly place further demands on the VAT compliance to be undertaken when registered for VAT indirectly in Italy. It is a certainty that greater communication would have to exist between the entity who are VAT registered and the business person’s Fiscal Representative keeping the VAT records.
The Italian Tax Authorities also have to be notified about the location of e-archiving by filing a specific form which is known as a Form AA7/10.