Compensation of VAT paid for the settlement concession of a tax audit report
| Insights
With reply to ruling n. 349 on August 28th, 2019 the Italian Revenue Agency recognized the possibility to claim for compensation from their assignee/customer, for those who have defined a tax audit report (so-called PVC) pursuant to art. 1 of Legislative Decree 119/2018.
According to the provision of art. 60, par. 7, of Presidential Decree 633/1972, the taxpayer may claim for compensation after having paid the higher amount of tax assessed (in addition to penalties and interests due). In such case, the right to deduction may be exercise by the transferee, notwithstanding the ordinary principles, by the VAT return related to the second year following the one when the VAT payment was made.
Art. 60 of Presidential Decree 633/1972, however, expressly subordinates the right to claim for compensation of VAT to the existence of a notice of assessment or correction: apparently the possibility of compensation for the transferor should be excluded if the payment of the VAT has been made pursuant to tax concession provision.
However, the Italian Tax Authority stated that according to the principle of tax neutrality the aforementioned provision must be interpreted in the sense of admitting the compensation of the higher VAT, ascertained by the inspectors and paid by the taxpayer, even in lack of a proper assessment notice.
In its reply the Italian Revenue Agency subordinates the right to claim for compensation to the definitive nature of the tax payment: this also implies that in the case of payment by installments of the sum due for the purposes of the definition, the right of compensation may be exercised in proportion to the value of the installments paid.