VAT, the value added tax is a tax that affects, through a system of detractions and compensation, the increase in value that a product incurs in the production and distribution phases. Its total effect is on the final consumer, who has to pay the entire tax. VAT mainly affects imports, transfer of goods and the performance of services by companies, craftsmen and professions.
The tax rate varies depending on the type of product or service in question, as well as the State which will collect the VAT.
In Italy, the standard rate is 21% to be added to the value of the product or service.
There are some goods and services to which a reduced rate is applicable.
The reduced rate of 10% may be applicable, for instance, to refurbishment of an apartment. A reduced rate of 4% is applicable to the price of basic foodstuff.
Whoever intends to carry out a business activity that involves the application of VAT must therefore, within 30 days of establishing the business, apply for the VAT number from the Italian Revenue Agency (Agenzia delle Entrate).
In Italy, VAT number is made up of an expression of 11 alphanumeric characters. The number identifies the taxpayer and the type of business carried out.
Information about how to obtain the VAT number can be obtained from the website of the Italian Revenue Agency at www.agenziaentrate.gov.it or from professional accountants.
The forms to be used in applying for VAT number vary depending on the type of business to be carried out (a sole trader, general partnership, etc).
Form AA9/10 is to be used in application for VAT number by individual self-employed workers or sole traders.
Form AA7/10 is to be used in application for VAT number by non-individuals (companies, associations, organizations, etc).
Form AA9/10. Individual self-employed workers or sole traders
Form AA9/10 and instructions for completing it can be obtained free of charge from the website of the Italian Revenue Agency at www.agenziaentrate.gov.it and from the website of the Ministry of Economy and Finance at www.finanze.gov.it.
This form can be used to notify the authorities of the start-up or cessation of business.
How to submit Form AA9/10
Two copies of the form can be submitted directly or through a delegate to:
- any territorial office of the Revenue Agency, regardless of the taxpayer’s fiscal residence;
- by post, in a single copy, by registered mail, enclosing a photocopy of the applicant’s ID document. This can be posted to any territorial office of the Revenue Agency, regardless of the taxpayer’s fiscal residence. In such a case, the submission is considered to have been made on the day it was posted;
– online, directly to the Revenue Agency, either by the taxpayer or authorised persons. In such a case, the submission is considered to have been made on the day the Revenue Agency received it.
Apart from applying for the VAT number, all businesses must be registered with the Register of Enterprises (Registro delle Imprese) at the local Chamber of Commerce. Both INAIL (Italian Workers’ Compensation Authority) and INPS (National Social Security Institute) must also be notified of their existence.
The single-notice registration system
It’s important to note that in April 2010, the government introduced the single-notice registration system - “Comunicazione Unica”.
The enables a new business to prepare only one application form which is sent to the Register of Enterprises (www.registroimprese.it) and at the same time forwarded to all other relevant offices.
The single-notice registration system must be used by all taxpayers who are obliged to register with the Register of Enterprises or with the Repository of economic and administrative information (REA - Repertorio delle notizie economiche ed amministrative).
The single-notice registration system is optional for those not under obligation to register with the above.
Apart from enabling the applicant to fill in the Form AA9/10, single-notice registration system frees the applicant from the task of sending multiple notifications of the business start-up to different offices (Register of Enterprises, INPS, INAIL, etc).
One can obtain all the necessary information about the single-notice registration system from the website of Register of Enterprises at www.registroimprese.it.
For some categories of self-employed workers, the social security registration obligations are fulfilled through registration with the appropriate social security institutions.
Sections of Form AA9/10
Form AA9/10 has different sections which must be dully filled in. The following information must be indicated in the application form: date of business start-up, personal data of the person applying for registration, name of the firm, the firm’s address or office, description of the business, projected or presumed turnover (those who benefit from reduced tax rates should not indicate this), the place where accounts book are kept, residence address (physical persons residing in Italy have fiscal residence in the city council where they are registered. In case of non-residents, please indicate the fiscal residence of the firm’s legal representative).
Form AA7/10. Non-individuals (companies, associations, organizations, etc)
All non-individuals (companies, associations, organizations, etc) interested in applying for VAT number must fill in Form AA7/10.
It can be obtained free of charge from the website of the Italian Revenue Agency at www.agenziaentrate.gov.it and from the website of the Ministry of Economy and Finance at www.finanze.gov.it.
As already said, from 1st April 2010, all taxpayers who are obliged to register with the Register of Enterprises or with the Repository of economic and administrative information (REA - Repertorio delle notizie economiche ed amministrative) must use the single-notice registration system.
It enables the applicant to only prepare one application which is sent to the Register of Enterprises (www.registroimprese.it) and at the same time forwarded to all other relevant offices.
The form must be submitted within 30 days of establishing the business, using the same modalities used in submitting Form AA9/10.
Form AA7/10 has different sections which must be dully filled in. The following information must be indicated in the application form: date of business start-up, tax code if available, name of the firm in full as it appears in start-of-business statement or certificate of registration with the Chamber of Commerce, full address of the firm’s office (legal, administrative, or effective).
In this case the firm’s fiscal residence should coincide with its legal or administrative address. If this is not the case, the fiscal residence should be located in the city council where the firm has a branch or where it carries out most of its activities.
Personal data of the company’s legal representative or manager must also be indicated in the form.
The place where accounts book are kept must also be indicated.
Form ANR/3. Non residents
Form ANR/3 must be used by subjects who are not resident in Italy and who carry out business in another Member State of the European Union or third Country with legal instruments in place governing mutual assistance for the purpose of indirect taxation. Such subjects must intend to carry out operations in Italy which are relevant for VAT purposes, fulfilling the obligations and exercising the rights that derive from the direct application of said tax.
The aforementioned subjects wishing to adopt this system must register themselves directly at the competent office before carrying out any operations of territorial significance in Italy. Form ANR/3 must also be used to communicate changes of one or more of the details indicated in the declaration for direct registration, or to communicate the cessation of their activity.
Information about how to fill in Form AA9, Form AA7 and Form ANR/3 can be obtained from the website of the Italian Revenue Agency at www.agenziaentrate.gov.it, by contacting the Agency’s call centre or other offices providing similar services.
By Stranieri in Italia