The law decree n. 50/2017, art. 2, has shorted the period for exercising the right to recover input VAT.
Please find below a brief summary of the new legislation:
- The right to deduct VAT relating to services and goods acquired or imported arises when the tax become payable and this right can be exercised, at the latest, with the VAT declaration related to the year in which the right of deduction emerged (and no longer with the tax declaration of the second year after the right emerged) and at the conditions existing when the right arose.
- Registration of invoices must be carried out before the VAT periodic liquidation in which the right of deduction has been exercised, and in any case within the deadline for filing the annual VAT declaration referred to the year in which the invoice has been received.
- The provisions apply to invoices and customs bills issued from 1st January 2017. Therefore the new provisions do not apply to invoices and customs bills issued in previous years for which the right of deduction has not yet been exercised and for which the time limit for the deduction exercise (based on previous regulations) has not yet expired.
Below please find an example:
Example:
- Previous legislation:
Purchase carried out in May 2017. Invoice date 15th May 2017.
It could be deducted from the liquidation of May 2017 until the 2019 VAT annual return filing deadline, to be submitted by April 30, 2020.
- Current legislation:
Purchase carried out in May 2017. Invoice date 15th May 2017.
The deduction may be exercised, at the latest, within the term for the filing of the 2017 VAT annual return, to be submitted by April 30, 2018.