Vat grouping rules
- AT A GLANCE - VAT GROUPING RULES
Aim: simplify the application of Vat rules for company groups and reduce fiscal burdens.
Qualifying persons: Companies closely bound by financial, economic and organizational links.
Benefits: the group will be considered as a single Vat taxable person.
What is it
The Vat grouping rules simplify the application of Vat rules for company groups and reduce fiscal burdens, considering the group as a single Vat taxable person.
Who is eligible
The option is reserved to companies closely bound by the following financial, economic and organizational links:
- they have to be subject to a common control, through a direct or indirect participation granting 50% or more of voting rights; this requirement is satisfied even if the common controlling party is based in a foreign Country with which an exchange of information instrument is in force with Italy (financial link)
- they must perform the same core business and economic activities, or, alternatively, the activities must be complementary, ancillary and auxiliary with respect to the other group members (economic link)
- a coordination between the decision making bodies of the involved entities has to exist (organizational link).
Companies can fill in the form (IT) from 1 January to 30 September of every year in order to apply Vat grouping rules starting from the following year.
If companies fill in the form from 10 October to 31 December the Vat grouping rule will apply starting from the second year following the option.
Once the election for this regime is made, all entities fulfilling the requirements must adhere to the group (All-in/All-out) and the option last at least 3 years.
As a consequence of the application of this regime, the group itself will be considered as a single Vat taxable person. Therefore:
- transactions carried out between the companies of the group will not be subject to Vat
- transactions carried out between a group member and a third party will be treated as being made by the group as an entity.