VAT – Advance Payment
Latest update: 02/04/2021
About the payment
27 December is the deadline for making the advance payment of VAT due for the periodic settlements for the last month or quarter of the year. The payment must be made online using Form F24.
Who must pay
All VAT taxpayers are obliged to make the advance payment except those who are not required to pay VAT monthly or quarterly .
Taxpayers who do not have one of the two data: "historical" or "forecast", on which the calculation is based, are exempt from paying the advance.
For example, this is the case of taxable persons who:
- Have ceased their activity , also due to death, by 30 November if they are required to pay monthly, or by 30 September if they are allowed to pay quarterly, or have started their activity;
- Have closed the previous tax period with a tax credit (also resulting from the periodic VAT settlement), regardless of whether or not a refund request was submitted;
- although they have made a payment for the month of December or for the last quarter of the previous tax period or based on the yearly VAT return for the previous tax period, they expect to close their VAT accounts with a deductible tax surplus.
Taxpayers who owe no more than EUR 103.29 for the advance payment are also not required to make the payment
Taxpayers exempt from making the advance payment include:
- taxpayers who, during the tax period, have carried out only non-taxable, exempt or not subject to VAT transactions or, in any event, transactions for which there was no obligation to pay the tax;
- farmers, as referred to in Article 34(6) of Presidential Decree No 633 of 1972;
- persons carring out entertainment and gaming activities under special arrangement;
- amateur sports associations, as well as non-profit and tourist information and local promotion (Pro Loco) associations, under the flat-rate scheme;
- collectors and sellers of scrap, waste, waste paper, glass and similar products, who are exempt from the obligation to settle and pay the tax individual entrepreneurs who have leased out their sole holding, by 30 September if they are quarterly taxpayers, or by 30 November if they are monthly taxpayers, provided that they do not carry out other activities subject to VAT.
How it is calculated
The amount of the advance payment of VAT can be calculated by choosing, according to convenience, one of the three different following methods of calculation:
Applying the historical method, the advance payment of VATis equal to 88% of the payment that was made, or should have been made, for the same month or quarter of the previous year.
The payment used as a basis for calculation must be gross of the advance payment due for the previous year.
In simple terms, the basis of calculation, on which the 88% rate is to be applied, is equal to the tax debt resulting:
- for monthly taxpayers, from the periodic settlement relating to December of the previous year
- for ordinary quarterly taxpayers, from the annual VAT return
- for ‘special’ quarterly taxpayers (road hauliers, fuel distributors, water, gas, electricity, etc.), from the periodic payment for the fourth quarter of the previous year.
Using the forecasting method, the advance payment is calculated on the basis of an estimate of the transactions that are expected to be carried out up to 31 December.
With this method, the advance payment is equal to 88% of the VAT expected to be paid:
- for the month of December, in the case of monthly taxpayers
- at the time of the annual VAT return, for ordinary quarterly taxpayers
- for the fourth quarter, for ‘special’ quarterly taxpayers.
In order to make the historical data homogeneous with the forecast data, it is necessary to consider the forecast data net of any deductible surplus carried forward from the previous month or quarter.
The calculation using the analytical method is based on the transactions carried out up to 20 December. In particular, the advance payment is equal to 100% of the amount resulting from a special settlement that takes into account the VAT related to the following transactions:
- transactions recorded in the register of issued invoices (or fees) from 1 December to 20 December (in the case of monthly taxpayers), or from 1 October to 20 December (in the case of quarterly taxpayers)
- transactions carried out, but not yet recorded or invoiced, from 1 November to 20 December
- transactions recorded in the purchase invoice register from 1 December to 20 December (in the case of monthly taxpayers), or from 1 October to 20 December (in the case of quarterly taxpayers).
How to pay
The advance payment must be made online using the F24 form. Taxpayers can deduct from the advance payment any tax credits or contributions available to them. Unlike what is foreseen for periodic payments, ordinary quarterly taxpayers do not have to apply the interest surcharge of 1%.
The advance payment must also be deducted from the VAT to be paid for December (for monthly VAT taxpayers), at the time of the annual VAT return (for quarterly taxpayers) or from the amount due for the fourth quarter (for special quarterly taxpayers).
The tax codes to be used in the F24 form for the VAT advance payment are:
- 6013 for monthly taxpayers
- 6035 for quarterly taxpayers.
Change in the payment scheme
If there is a change in the payment schedule between one year and another, the following rules apply for the purposes of calculating the historical figure:
- For the change from monthly to quarterly arrangement, the advance payment must be calculated with reference to the settlement of the last three months of the previous year
- For the change from quarterly to monthly arrangement, the advance payment must be calculated on the basis of one third of the VAT paid for the fourth quarter.
Entities with separate accounts
Taxpayers with separate accounts (Article 36 of Presidential Decree No 633/1972) must separately calculate the amount relating to each activity carried out and, therefore, are required to make separate tax settlements.
Therefore, the advance payment of VAT must be calculated by summing up the data relating to each activity, thus offsetting the amounts due with the amounts receivable.