Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2017/784 as regards the period of authorisation for, and the scope of, the special measure derogating from Articles 206 and 226 of Directive 2006/112/EC on the common system of value added tax taken by Italy
Date: 2023-06-26
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Italy, VAT, derogation from EU law, e-invoicing, goods and services, investment company, provision of services, public authorities, supplier, tax relief

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   EUROPEAN COMMISSION  Brussels, 26.6.2023  COM(2023) 342 final 2023/0214 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2017/784 as regards the period of authorisation for, and the scope of, the special measure derogating from Articles 206 and 226 of Directive 2006/112/EC on the common system of value added tax taken by Italy  
 
EXPLANATORY MEMORANDUM 

Pursuant to Article 395(1) of Directive 2006/112/EC of 28 November 2006 on the common 
system  of  value  added  tax1  ('the  VAT  Directive'),  the  Council,  acting  unanimously  on  a 
proposal  from  the Commission,  may authorise any Member State to  apply special measures 
for  derogation  from  the  provisions  of  that  Directive  in  order  to  simplify  the  procedure  for 
collecting VAT or to prevent certain forms of tax evasion or avoidance. 

By  letter  registered  with  the  Commission  on  26  September  2022,  the  Italian  Republic 
requested  authorisation  to  continue  to  derogate  from  Articles  206  and  226  of  the  VAT 
Directive with regard to VAT payment and invoicing requirements for supplies of goods and 
services  made  to  public  authorities,  to  companies  controlled  by  central  and  local  public 
authorities and to a list of companies listed on the stock exchange.  

By letter registered with the Commission on 8 May 2023, Italy modified its request, asking 
that the scope of the authorisation should be reduced from 1 July 2025 to supplies of goods 
and  services  made  to  public  authorities  and  to  companies  controlled  by  central  and  local 
public authorities. In accordance with Article 395(2) of the VAT Directive, the Commission 
informed the other Member States by letter dated 11 May 2023 of the request made by the 
Italian Republic. By letter dated 12 May 2023, the Commission notified the Italian Republic 
that it had all the information necessary to consider the request. 

1. 

• 

CONTEXT OF THE PROPOSAL 

Reasons for and objectives of the proposal 

Following  the  introduction  of  a  system  of  statistical  checks,  Italy  discovered  considerable 
VAT fraud in relation to supplies of goods and services to public authorities. To put an end to 
these  practices  Italy  requested  in  2014  that,  for  supplies  to  public  authorities,  the  VAT  due 
would no longer be paid to the supplier, but to a separate and blocked bank account of the tax 
authorities.  This  mechanism  is  commonly  referred  to  as  a  type  of  ‘split  payment’,  as  the 
payment which is usually transferred in full by the customer to the supplier (consideration in 
exchange for the supply plus VAT) is split into: (i) on the one hand, the consideration, which 
is  paid  to  the  supplier  of  the  goods  or  services;  and,  (ii)  on  the  other  hand,  the  VAT  due, 
which is paid to a blocked bank account of the tax authorities.  
The derogation was authorised by Council Implementing Decision (EU) 2015/14012 until 31 
December  2017.  It  authorised  Italy  to  derogate  from  Article  206  of  the  VAT  Directive 
regarding VAT payment and from Article 226 of the VAT Directive regarding the invoicing 
rules.  

The  derogation  was  requested  by  Italy  for  a  limited  period,  allowing  it  to  organise  and 
implement adequate control policy measures and to fully benefit from the data available via 
electronic invoicing. The implementation of an obligation of electronic invoicing for supplies 
to  public  authorities,  allowing  the  possibility  of  real-time  control  of  individual  transactions 
and  the  exact  amounts  of  VAT  which  public  authorities  are  due  to  pay  on  their  purchases, 
should  allow  Italy  to  audit  the  sector  concerned  on  the  basis  of  conventional  control 
techniques  without  the  need  to  derogate  from  the  VAT  Directive  in  order  to  apply  the  split 
payment measure.  

According  to  information  submitted  by  Italy,  the  introduction  of  electronic  invoicing  for 
supplies to public authorities provided tax authorities considerable information regarding the 

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OJ L 347, 11.12.2006, p. 1. 
OJ L 217, 18.8.2015, p. 7–8.  

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flow  of  invoices  allowing  the  control  of  transactions  and  corresponding  VAT  amounts. 
However,  another  element  of  the  effective  control  system  –  the  obligation  to  communicate 
data of all invoices issued and received to the tax authorities – was only introduced as from 1 
January  2017.  More  time  was  required  for  the  measure  to  be  effective  and  to  effectively 
induce  taxpayers  to  improve  their  compliance  with  tax  obligations.  Consequently,  Italy 
requested  to  prolong  the  derogation  from  Articles  206  and  226  of  the  VAT  Directive  on 
supplies to public authorities.  

Additionally, Italy discovered tax evasion in the sector of supplies to companies controlled by 
public authorities and to a small group of 40 companies that are listed on the stock exchange. 
In  order  to  fight  this  tax  evasion  and  to  ensure  no  further  VAT  losses  for  public  revenues, 
Italy requested to broaden the scope of the derogation from Articles 206 and 226 of the VAT 
Directive to supplies of goods and services made to the above mentioned entities which were 
considered  by  Italy  as  reliable  as  public  authorities.  These  entities  are  both  companies 
controlled by central and local public authorities and a list of around 40 companies listed on 
the  stock  exchange  adding  up  to  a  total  of  around  2  400  companies.  Italy  expected  that 
extending the split payment measure to these companies would tackle tax evasion in the form 
of  non-payment  of  VAT  by  the  suppliers  to  the  entities  concerned  and  consequently  would 
increase the VAT revenues. 

The  extension  of  the  derogation  with  its  widened  scope  was  authorised  by  Council 
Implementing  Decision  (EU)  2017/7843  until  30  June  2020.  This  derogation  was  further 
extended by Council Implementing Decision (EU) 2020/11054 until 30 June 2023. 

The split payment mechanism is part of a package of measures introduced by Italy in order to 
counter tax fraud and evasion. This package of measures involves amongst others electronic 
invoicing and the electronic transmission of data on daily charges. Electronic invoicing was 
introduced  as  of  1  July  2018  in  respect  to  certain  sectors,  and  as  of  1  January  2019  in  a 
generalised  form.  This  obligation  was  authorised  by  Council  Implementing  Decision  (EU) 
2018/5935. The electronic transmission of data on daily charges requires taxpayers engaged in 
the  retail  trade  and  similar  activities  (not  involving  invoicing  obligations)  to  store  data  on 
daily  charges  electronically  and  transmit  them  electronically  to  the  Agenzia  delle  Entrate. 
This latter obligation became applicable on 1 January 2020 and, for taxpayers with a turnover 
of over EUR 400 000, on 1 July 2019. This package of measures has replaced other control 
measures, allowing the Italian tax authorities to cross-check the different operations declared 
by the operators and to monitor their VAT payments. The latest legislative changes introduced 
an  obligation  to  make  the  data  on  VAT  transactions  from  electronic  invoices,  cross-border 
transactions  and  electronic  charges  immediately  available  to  taxpayers  in  order  to  simplify 
their compliance;  leading to  VAT returns being pre-completed  by the  Agenzia  delle Entrate 
and  to  the  preparation  of  regular  VAT  assessments,  which  taxpayers  can  accept  or 
supplement.  

According to recital 7 of Decision 2017/784, once this system  was fully implemented, there 
should be no need to further derogate from Directive 2006/112/EC in order to apply the split 
payment measure. However, as reflected in recital 8 of Decision 2020/1105, given that, at that 
time, these measures had been recently implemented, it would have been premature to  fully 
assess their  effectiveness.  Further, in  view of the time of difficulties  Italy was  experiencing 
due  to  the  COVID-19  pandemic,  taxable  persons  had  more  difficulties  to  implement  the 

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5 

OJ L 118, 6.5.2017, p. 17. 
OJ L 242, 28.7.2020, p. 4. 
Council  Implementing  Decision  (EU)  2018/593  of  16  April  2018  authorising  the  Italian  Republic  to 
introduce  a  special  measure  derogating  from  Articles  218  and  232  of  Directive  2006/112/EC  on  the 
common system of value added tax, OJ L 99, 19.4.2018, p. 14-15. 

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changes  required  in  their  invoicing  systems,  similarly  to  tax  administrations  to  adapt  their 
control and IT-systems. Therefore, the removal of the measure could have significant negative 
effects  in  the  fight  against  tax  evasion  and  the  collection  of  VAT,  as  well  as  on  the 
administrative  costs  for  taxable  persons.  For  that  reason,  the  authorisation  to  continue 
applying the split payment mechanism was extended until 30 June 2023.  

Nevertheless, Italy considers that the split payment mechanism and the mandatory electronic 
invoicing have presented synergies that have resulted in a significant reduction of VAT fraud 
and  therefore  should  continue  to  coexist,  given  that  the  split  payment  is  a  tool  to  prevent 
fraud, while the electronic invoicing is a tool to detect fraud. 

According to Italy, the effectiveness of the split payment mechanism lies in the fact that this 
instrument  acts  in  a  preventive  manner  with  respect  to  cases  of  tax  evasion,  thus  ensuring 
greater revenue than any measure involving ex-post control activity. Regardless of how timely 
and  immediate  the  control  activity  may  be,  ex-post  measures  cannot  always  ensure  the 
effective recovery of the tax evaded. While electronic invoicing (or reporting of invoice data 
in those cases where electronic invoicing is not mandatory) is an extremely effective measure, 
once  the  control  has  been  carried  out,  it  is  possible  that  the  tax  evader  does  not  have  the 
necessary  financial  capacity  to  pay  the  debt.  For  this  reason,  Italy  claims  that  the  split 
payment mechanism is a very effective tool when the recipient has a degree of tax compliance 
higher  than  the  supplier.  Therefore,  Italy  considers  that  these  measures  are  complementary, 
not mutually interchangeable. 

Nevertheless,  to  honour  its  commitment  to  gradually  phase  out  this  measure,  by  letter 
registered with the Commission on 8 May 2023, Italy modified its request to exclude supplies 
of goods and services to companies listed in the FTSE MIB index of the Borsa Italiana from 
the scope of the special measure as of 1 July 2025. This timeframe will allow taxable persons 
affected by the restriction of the scope of the derogation to make the appropriate operational 
adjustments  and  the  Italian  authorities  to  monitor  the  effectiveness  of  the  measure  and 
adequately evaluate possible alternative measures. 

It  should  be  noted  that  one  of  the  effects  of  split  payment  is  the  fact  that  suppliers  being 
taxable persons are not able to offset the VAT paid on their input with the VAT received on 
their  supplies.  They  may  constantly  be  in  a  credit  position  and  may  need  to  ask  for  an 
effective  refund  of  this  VAT  from  the  tax  administration.  On  the  other  hand,  under  certain 
conditions  Italy authorises these suppliers to offset the VAT they did not receive from their 
customers  with  other  taxes  due  in  Italy,  thus  limiting  the  cash  flow  problem  that  otherwise 
may arise for businesses liable for paying their taxes in Italy. According to the data provided 
by Italy, the average time for processing VAT refunds in 2021, in general, was 68 days while 
in requests referred to taxable persons under the split payment, the average was of 63 days. 

In  the  light  of  the  above,  it  is  proposed  to  accept  the  request  made  by  Italy  to  prolong  the 
authorisation  of  the  derogation  but  to  do  so  only  until  30  June  2026  (as  opposed  to  31 
December  2026,  as  requested  by  Italy).  That  period  should  be  sufficient  to  assess  the 
effectiveness  of  the  measures  implemented  to  reduce  tax  evasion  in  the  sectors  concerned. 
Further, by then businesses and tax administration will be in a better position to undertake the 
necessary adaptations in their systems. 

Given  the  broad  scope  of  the  derogation,  it  is  important  to  ensure  the  necessary  follow-up 
within the framework of this derogation and, in particular, to assess the impact of the measure 
on  the  level  of  VAT  fraud  and  on  the  situation  of  VAT  refunds  for  the  taxable  persons 
covered by the derogation. Italy is, therefore, requested to provide a report on the VAT refund 
procedure with regard to the situation of suppliers (taxable persons) covered by the derogation 
fifteen months after its entry into force. This report should, in particular, provide statistics as 

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regards the average time needed to effectively refund the VAT to these taxable persons and 
outline particular problems that might have occurred in this  context. This report should also 
indicate  the  different  measures  implemented  to  combat  the  tax  evasion  for  the  supplies 
covered  by  the  derogation,  their  date  of  entry  into  force,  as  well  as  an  evaluation  of  their 
effectiveness. 

• 

Consistency with existing policy provisions in the policy area 

The derogation is consistent with the existing policy provisions in the policy area.  

The Commission adopted on 8 December 2022 a Proposal for a Council Directive amending 
Directive 2006/112/EC as regards VAT rules for the digital age6 . One of the main objectives 
of the proposal to fight VAT fraud by implementing digital reporting requirements based on 
e-invoicing. This reform, once adopted, will allow Member States to implement mandatory e-
invoicing, as Italy is currently doing, but eliminating the need to request further derogations 
from  the  VAT  Directive  in  order  to  implement  such  systems.  As  mentioned  above,  the 
reporting of data to the tax administration through electronic invoicing is part of the package 
of  measures  adopted  by  Italy,  together  with  the  split  payment  mechanism,  to  fight  against 
VAT fraud. 
By Council Implementing Decision (EU) 2019/3107 Poland was granted a similar derogation 
to apply the split payment mechanism. This derogation was initially granted until 28 February 
2022 and later extended until 28 February 20258. The Polish split payment system comprises 
a voluntary and a mandatory split payment mechanism. This mandatory split payment system 
affects supplies of goods and services paid by electronic bank transfers, carried out between 
taxable  persons  in  areas  particularly  exposed  to  VAT  fraud  and  in  which  fraud  has  been 
detected for years. In the Polish mandatory split payment system, the bank acts as a splitting 
agent, transferring the amount paid by the customer to the relevant accounts of the supplier, 
i.e. the taxable amount to the regular account of the trader and the VAT amount to the trader's 
blocked VAT account. Funds on the blocked VAT account are owned by the taxable person, 
however, his possibility to dispose of the funds is limited in principle to the payment of VAT 
due  to  the  tax  authority  or  to  the  payment  of  VAT  resulting  from  invoices  received  from 
suppliers. 

2. 

• 

LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY 

Legal basis 

The legal basis is Article 395 of the VAT Directive which provides that the Council, acting 
unanimously  on  a  proposal  from  the  Commission,  may  authorise  any  Member  State  to 
introduce  special  measures  for  derogation  from  the  provisions  of  this  Directive,  in  order  to 
simplify  the  procedure  for  collecting  VAT  or  to  prevent  certain  forms  of  tax  evasion  or 
avoidance. 

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COM/2022/701 final. 
Council Implementing Decision (EU) 2019/310 of 18 February 2019 authorising Poland to introduce a 
special measure derogating from Article 226 of Directive 2006/112/EC on the common system of value 
added tax, OJ L 51, 22.2.2019, p. 19.  
Council Implementing Decision (EU) 2022/559 of 5 April 2022 amending Implementing Decision (EU) 
2019/310  as  regards  the  authorisation  granted  to  Poland  to  continue  to  apply  the  special  measure 
derogating from Article 226 of Directive 2006/112/EC on the common system of value added tax, OJ L 
108, 7.4.2022, p. 51. 

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• 

Subsidiarity (for non-exclusive competence)  

Considering the provision of the VAT Directive on which it is based, the proposal falls under 
the exclusive competence of the European Union. Hence, the subsidiarity principle does not 
apply. 

• 

Proportionality 

The Decision concerns an authorisation granted to a Member State upon its own request and 
does not constitute any obligation.  

Given that the derogation is limited in time and restricted to supplies of goods and services to 
the public sector, to companies that are state-controlled and to companies listed on the stock 
exchange (the latter only until 1 July 2025), the scope is targeted to specific sectors that pose 
considerable problems of tax evasion. Therefore, the special measure is proportionate to the 
aim pursued, i.e. to combat tax evasion. 

• 

Choice of the instrument 

The instrument proposed is a Council Implementing Decision. 

Under Article 395 of the VAT Directive, a derogation from the common VAT rules is only 
possible upon authorisation by the Council, which is acting unanimously on a proposal from 
the  Commission.  A  Council  Implementing  Decision  is  the  most  suitable  instrument  since  it 
can be addressed to an individual Member State. 

3. 

• 

RESULTS 
CONSULTATIONS AND IMPACT ASSESSMENTS 

EX-POST 

EVALUATIONS, 

OF 

STAKEHOLDER 

Stakeholder consultations 

No stakeholder consultation has been conducted. The present proposal is based on a request 
made by Italy and concerns only this particular Member State. 

• 

Impact assessment 

An impact assessment was not carried out as the proposal is not expected to lead to significant 
economic, environmental or social impacts. 

The proposal for a Council Implementing Decision aims at prolonging the application of the 
derogation from Articles 206 and 226 of the VAT Directive for supplies to public authorities, 
to  companies  controlled  by  central  and  by  local  authorities  and  to  a  list  of  around  40 
companies listed on the stock exchange. By imposing that the VAT due is paid to a separate 
bank  account  of  the  tax  administration,  the  proposal  for  a  Council  Implementing  Decision 
aims  in  the  first  place  at  combating  tax  evasion  in  the  form  of  non-payment  of  VAT  by 
suppliers  to  the  listed  entities.  The  measure  currently  applied  by  Italy  appeared  to  be  an 
effective tool for this aim.  

According to the data provided by Italy, the implementation of the measure entails an increase 
in payments of about EUR 4.6 billion per year. This amount was determined by the Agenzia 
delle Entrate, by considering that for the suppliers of the Pubblica Amministrazione (PA), for 
the  same  transactions,  the  sum  of  the  lower  output  VAT  actually  paid  following  the 
introduction of split payment mechanism, net of the increase in compensations and refunds, is 
lower than the payments made by the PA relating to the same transactions. Further analysis 
made by Italy conclude that this effect has remained stable during all years that the measure 
has been implemented with its full scope. Italy fears that the elimination of the measure could 

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result in a loss of revenue of the same magnitude at a time when Italy has to still cope with a 
significant VAT gap. 

Another  effect  that  should  be  taken  into  account  is  that  suppliers  under  this  system  do  not 
receive  the  VAT  from  their  clients.  Therefore,  they  will  more  often  have  to  ask  for  an 
effective refund of the VAT, in case they cannot offset this VAT with other taxes due in Italy. 
To  avoid  a  negative  impact  on  these  taxable  persons,  even  more  so  if  the  suppliers  are  not 
established in Italy, it is essential that the refund procedure is functioning properly and timely. 
According  to  Italy,  the  average  processing  times  for  refunds  largely  comply  with  the  three-
month  deadline  established  by  the  national  legislation9.  Further,  these  processing  times  are 
shortened  for  companies  subject  to  the  split  payment  mechanism  thanks  to  the  priority 
treatment of these requests. Moreover, the introduction of electronic invoicing has facilitated 
the overall processing of requests, contributing to the general reduction of the time required to 
process  refund  requests.  According  to  the  data  provided  by  Italy,  the  average  time  for 
processing refunds in 2021 was 68 days while in requests under the split payment the average 
was of 63 days. 

• 

Fundamental rights 

The proposal does not have any consequences for the protection of fundamental rights. 

4. 

BUDGETARY IMPLICATIONS 

The measure will have no adverse impact on the Union's own resources accruing from VAT. 

9 

Article 38-bis of Presidential Decree No 633 of 26 October 1972. 

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2023/0214 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision (EU) 2017/784 as regards the period of authorisation 
for, and the scope of, the special measure derogating from Articles 206 and 226 of 
Directive 2006/112/EC on the common system of value added tax taken by Italy 

THE COUNCIL OF THE EUROPEAN UNION, 

Having regard to the Treaty on the Functioning of the European Union,  

Having  regard  to  Council  Directive  2006/112/EC  of  28  November  2006  on  the  common 
system of valued added tax1, and in particular Article 395(1) thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

(3) 

(4) 

(5) 

By  Council  Implementing  Decision  (EU)  2015/14012,  Italy  was  authorised  until  31 
December  2017  to  require  that  value  added  tax  (VAT)  due  on  supplies  to  public 
authorities was to be paid by those authorities to a separate and blocked bank account 
of  the  tax  authorities  (‘the  special  measure’).  The  special  measure  constituted  a 
derogation  from  Articles  206  and  226  of  Directive  2006/112/EC  in  relation  to  VAT 
payment and invoicing rules.  
By Council Implementing Decision (EU) 2017/7843, Italy was authorised to apply the 
special measure until 30 June 2020, and its scope was broadened to include supplies to 
certain companies controlled by public authorities and to companies listed on the stock 
exchange  that  are  included  in  the  Financial  Times  Stock  Exchange  Milano  Indice  di 
Borsa  (‘FTSE  MIB’)  index.  That  authorisation  was  subsequently  extended  until  30 
June 2023 by Council Implementing Decision (EU) 2020/11054. 

By letter registered with the Commission on 26 September 2022, Italy requested that 
that authorisation be prolonged until 31 December 2026. By letter registered with the 
Commission on 8 May 2023, Italy requested that the scope of the special measure be 
restricted, from 1 July 2025, to supplies of goods and services to public authorities and 
to certain companies controlled by public authorities. 

By letter dated  11  May  2023, the Commission  informed the other Member States of 
the request made by Italy. By letter dated 12 May 2023, the Commission notified Italy 
that it had all the information necessary to consider the request. 

The special measure is part of a package of measures introduced by Italy in order to 
counter  tax  fraud  and  evasion.  That  package  of  measures,  including  an  electronic 

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4 

OJ L 347, 11.12.2006, p. 1. 
OJ L 217, 18.8.2015, p. 7–8.  
OJ L 118, 6.5.2017, p. 17.  
OJ L 242, 28.7.2020, p. 4. 

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(6) 

(7) 

(8) 

invoicing obligation as authorised by Council Implementing Decision (EU) 2018/5935, 
has  replaced  other  control  measures  and  allows  the  Italian  tax  authorities  to  cross-
check  the  different  operations  declared  by  the  operators  and  to  monitor  their  VAT 
payments. 

Italy  considers  that,  in  the  context  of  the  package  of  measures  implemented, 
mandatory  electronic  invoicing  reduces  the  time  needed  by  the  tax  administration  to 
become aware of the  existence of a potential case of  tax fraud or  evasion. However, 
Italy also considers that, in the absence of the split payment mechanism introduced by 
the special measure, recovery from the tax fraudsters or evaders once the cross-check 
has been carried out could be impossible if they are insolvent. Thus, the split payment 
mechanism,  as  an  ex  ante  measure,  has  proved  to  be  highly  effective  and 
complementary to mandatory electronic invoicing, which is an ex post measure. 

Italy  repeatedly  committed  itself  to  not  seeking  the  renewal  of  the  special  measure 
allowing  the  application  of  the  split  payment  mechanism  once  the  package  of 
measures  Italy  intended  to  apply  was  fully  implemented.  However,  Italy  considers 
that, given the effectiveness of the special measure and its synergies with other applied 
measures, in particular the electronic invoicing obligation, the special measure should 
be  extended  to  avoid  a  setback  in  the  efforts  made  to  reduce  the  Italian  VAT  gap. 
Nevertheless,  in  order  to  honour  its  commitment  to  gradually  phase  out  the  special 
measure  Italy  modified its request to  exclude from  the scope of the  special measure, 
from  1  July  2025,  supplies  of  goods  and  services  to  companies  listed  on  the  stock 
exchange  that  are  included  in  the  Financial  Times  Stock  Exchange  Milano  Indice  di 
Borsa (‘FTSE MIB’) index. That timeframe will allow taxable persons affected by the 
restriction  of  the  scope  of  the  special  measure  to  make  the  appropriate  operational 
adjustments and the  Italian  tax  authorities to  monitor the effectiveness  of the  special 
measure and adequately evaluate possible alternative measures. 

One of the effects of the special measure is that suppliers, being taxable persons, are 
not able to offset the VAT paid on their input with the VAT received on their supplies. 
Such  suppliers  may  constantly  be  in  a  credit  position  and  may  need  to  ask  for  an 
effective  refund  of  this  VAT  paid  on  their  input  from  the  tax  administration. 
According  to  the  information  provided  by  Italy,  taxable  persons  carrying  out 
transactions subject to the split payment scheme are entitled to receive the payment of 
the relevant VAT credits as a priority, within the limit of the credit deriving from such 
transactions.  That  practice  implies  that  refund  requests  related  to  the  split  payment 
mechanism  are  processed  with  priority  both  during  preliminary  investigation  and 
during the payment of sums due from non-priority refunds. 

(9) 

The  requested  derogation  should  be  limited  in  time  to  allow  an  assessment  as  to 
whether  the  special  measure  is  appropriate  and  effective.  The  authorisation  should 
therefore be prolonged until 30 June 2026, which would leave sufficient time to assess 
the effectiveness  of the  measures  implemented by  Italy with  the aim of reducing tax 
evasion in the sectors concerned. 

(10)  To  guarantee  the  necessary  follow-up  within  the  framework  of  the  requested 
derogation and in  particular to  assess the impact on VAT  refunds to  taxable persons 
covered  by  that  derogation,  Italy  should  be  required  to  submit  a  report  to  the 
Commission  by  September  2024  on  the  overall  situation  of,  and  in  particular  the 

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Council  Implementing  Decision  (EU)  2018/593  of  16  April  2018  authorising  the  Italian  Republic  to 
introduce  a  special  measure  derogating  from  Articles  218  and  232  of  Directive  2006/112/EC  on  the 
common system of value added tax, OJ L 99, 19.4.2018, p. 14-15. 

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average time needed for, VAT refunds to taxable persons, and on the effectiveness of 
the  special  measure  and  any  other  measures  implemented  by  Italy  with  the  aim  of 
reducing tax evasion in the sectors concerned. That report should include a list of the 
different measures implemented, together with their date of entry into force. 

(11)  The  special  measure  is  proportionate  to  the  objectives  pursued  since  it  is  limited  in 
time  and  restricted  to  sectors  which  pose  considerable  problems  as  regards  tax 
evasion. In addition, the special measure does not create a risk that tax evasion would 
shift to other sectors or other Member States. 

(12)  The  special  measure  will  not  negatively  affect  the  overall  amount  of  tax  revenue 
collected  at  the  stage  of  final  consumption  and  will  have  no  adverse  impact  on  the 
Union’s own resources accruing from VAT. 

(13) 

Implementing Decision (EU) 2017/784 should therefore be amended accordingly, 

HAS ADOPTED THIS DECISION:  

Council Implementing Decision (EU) 2017/784 is amended as follows: 

(1) in Article 1, the third indent is deleted; 

Article 1 

(2) in Article 3, second subparagraph, the date ‘30 September 2021’ is replaced by the 

date ‘30 September 2024’; 

(3) in Article 5, the date ‘30 June 2023’ is replaced by the date ‘30 June 2026’. 

This Decision shall take effect on the day of its notification. 

However, Article 1, point (1), shall apply from 1 July 2025.  

Article 2 

This Decision is addressed to the Italian Republic. 

Done at Brussels, 

Article 3 

For the Council 
The President 

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