Union will also make strength, but first of all it saves money. One of the most important tax innovations contained in the Budget law (under discussion in the Chamber) is the possibility of setting up VAT groups starting from 2018. With this law, Italy implements an institution envisaged by an EU directive from 2006 which in recent years it has been adopted by various countries. Let's see what it is.
FROM GROUP VAT TO VAT GROUP: HERE'S WHAT'S CHANGING
First of all, beware of misunderstandings: the new VAT group is very different from group VAT, which already exists. The second now allows several companies to pay the tax together, but provides that each company remains a separate taxable person. It is precisely on this aspect that the most important change occurs. With the new legislation, in fact, the VAT group is a single taxable subject, while the companies that make it up "lose their autonomous subjectivity for the purposes of value added tax", as stated in the draft of the manoeuvre.
This difference has very important practical consequences:
1) The tax is no longer paid on transactions "between subjects participating in the same VAT group", because only the group is required "to comply with the provisions on VAT".
2) Consequently, the transactions carried out by a member of the group will be considered as carried out by the group itself; conversely, transactions carried out with respect to one of the members of the group are considered carried out with respect to the group itself.
WHO CAN CREATE A VAT GROUP
Only subjects who carry out business, arts or professions "established in the territory of the State - continues the draft - for which certain constraints of a financial, economic and organizational nature exist" can form a VAT group. What does it mean? Here is the explanation:
- financial constraint. It occurs when one subject controls another, when it is controlled by another or when both are controlled by a third party (which can also be based abroad, provided it is within the EU or in a country with which Italy has signed an information exchange agreement).
- Economic constraint. It occurs when “at least one of the following forms of economic cooperation exists between certain taxable persons established in the territory of the State: a) performance of a main activity of the same kind; b) performance of complementary or interdependent activities; c) carrying out activities which fully or substantially benefit one or more of them".
- organizational constraint. It occurs "when there is coordination between the decision-making bodies of certain subjects, operated by law (...) or even merely by de facto. Coordination can also be carried out through a third party, financially bound to the subjects considered".
Attention: if you choose to set up a VAT group, it is mandatory that all subjects "for which financial, economic and organizational constraints apply jointly". Furthermore, if the financial link exists between two subjects, the State assumes that the economic and organizational links also exist. If not, it is up to the taxpayer to prove it.
Finally, there are some subjects that the law prohibits from setting up VAT groups:
– the "permanent establishments abroad of persons having their headquarters in Italy";
– subjects "subject to bankruptcy, composition with creditors, compulsory administrative liquidation and extraordinary administration of large companies in crisis, subjects placed in ordinary liquidation and subjects whose company is subject to judicial seizure". Naturally, if a subject controls various companies, the seizure of only one of them prevents the others from participating in a VAT group as well.
HOW A VAT GROUP IS ESTABLISHED
The budget law delegates the approval of the model for the presentation of the declarations relating to the VAT group to a provision of the Revenue Agency. In any case, the maneuver specifies as of now that the return will be transmitted electronically and must contain the following information: "The name of the VAT group, the identification data of the group representative and of the subjects participating in the group itself, the certification the existence of financial, economic and organizational links between these subjects, the activity or activities carried out by the VAT group, the choice of domicile with the group representative by each subject participating in the same group, for the purposes of notification of documents and provisions relating to the tax periods for which the option is exercised (irrevocable election until the end of the period of forfeiture of the assessment action or imposition of the sanctions relating to the last year of validity of the option) and the signing of the group representative and of the other subjects who intend to participate in the group".
The establishment of the VAT group takes effect from the first day of the year following that of presentation of the return if this took place between 30 January and 31 September. In case of presentation between October 2018st and December 2019st, however, the validity of the VAT group starts from the first day of the second year following the declaration. Consequently, considering that the legislation will enter into force in XNUMX, the first VAT groups will be born in XNUMX at the earliest. The law also provides that each group must have a minimum duration of three years. Finally, membership of the group terminates the effects of all VAT options exercised by each person, even if the minimum term of validity has not expired.
RESPONSIBILITIES
The subject who fulfills the obligations and exercises the rights of the VAT group is its representative. By law, this role falls to the parent company. However, if the group involves only "sister" companies (i.e. controlled by the same subject, which however is not based in Italy), the representative is the subject with the highest turnover.
In any case, all subjects participating in the VAT group "are jointly and severally liable with the representative - continues the draft of the maneuver - for the sums that are due by way of tax, interest and penalties following the liquidation activities and of control” carried out by the Revenue Agency.
