Investment in Italy

Investment in ItalyViolations connected with the VAT returnFailure to submit an annual VAT return: the penalty ranges from 120 to 240 percent ofthe amount that should have been declared in the return. If VAT is not due on any of thetaxpayer’s transactions, the penalty ranges from EUR 258.00 to EUR 2,065.00.Submission of an inaccurate VAT return: the penalty ranges from 100 to 200 percent ofthe VAT not shown or of the excess VAT credit declared.Failure to record transactionsFailure to record transactions subject to VAT (including EU acquisitions): the penaltyranges from 100 to 200 percent of the VAT.Failure to record transactions that are VAT-exempt or non-taxable: the penalty rangesfrom 5 to 10 percent of the unrecorded amount.The penalty cannot be lower than EUR 516.00 per violation.Failure to record VAT-exempt or non-taxable transactions, which does not result incorporate income tax violations: the penalty ranges from EUR 258.00 to EUR 2,065.00.Where the supplier of goods or services fails to issue an invoice, or the invoice contains amistake, the purchaser is subject to a penalty equal to 100 percent of the relevant VAT if hefails to regularise the (non-issued or incorrect) invoice. This regularisation involves specificformalities.There are reduced penalties for violations of domestic reverse charge procedures, whereVAT has actually been paid by one of the parties. In this case, the penalty is equal to 3percent of the VAT incorrectly accounted for.Violations connected with exportsThere are penalties if a taxpayer does not comply with various provisions allowing VAT to becollected on exports. In principle, the penalties are proportional to the theoretical VAT thatcould be collected.Other violationsThere are fixed penalties for taxpayers who commit violations such as submitting a VATreturn that does not match the official format, failing to submit certain VAT communications,or failing to keep VAT records. The size of the penalty depends on the type of violation.Failure to make payments / Making underpaymentsThe penalty is 30 percent of the unpaid amount, plus interest of 5 percent on the unpaidamount.It is a criminal offence to fail to pay the VAT declared in the annual tax return by the deadlinefor the advance payment of the following year (currently 27 December). These rules aretriggered if the amount of VAT is higher than EUR 50,000.00. The taxpayer can be given aprison sentence ranging from six months to two years.© 2012 KPMG S.p.A., KPMG Advisory S.p.A., KPMG Fides Servizi di Amministrazione S.p.A., KPMG Audit S.p.A., Italian limited liability share capital companies, and Studio Associato Consulenza legale e tributaria, anItalian professional partnership, are member firms of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.83