Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2017/784 authorising the Italian Republic to apply a special measure derogating from Articles 206 and 226 of Directive 2006/112/EC on the common system of value added tax
Date: 2026-06-17
Institutions: Directorate-General for Taxation and Customs Union, European Commission
Subjects: Italy, VAT, derogation from EU law, e-invoicing, goods and services, provision of services, public authorities, tax collection, tax evasion, tax relief

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   EUROPEAN COMMISSION  Brussels, 17.6.2026  COM(2026) 281 final 2026/0146 (NLE)  Proposal for a COUNCIL IMPLEMENTING DECISION amending Implementing Decision (EU) 2017/784 authorising the Italian Republic to apply a special measure derogating from Articles 206 and 226 of Directive 2006/112/EC on the common system of value added tax  
 
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 9 October 2025, 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 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 27 April 2026 of the request made by the Italian Republic. By 
letter  dated  28  April  2026,  the  Commission  notified  the  Italian  Republic  that  it  had  all  the 
information necessary to consider the request.  

1. 

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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 
flow  of  invoices  allowing  the  control  of  transactions  and  corresponding  VAT  amounts. 
However,  another  element  of  the  effective  control  system  –  the  obligation  to  communicate 

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OJ L 347, 11.12.2006, p. 1. 
Council Implementing Decision (EU) 2015/1401 of 14 July 2015 authorising Italy to introduce a special 
measure  derogating  from  Articles  206  and  226  of  Directive  2006/112/EC  on  the  common  system  of 
value added tax, OJ L 217, 18.8.2015, p. 7–8.  

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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 abovementioned 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. Italy repeatedly committed itself 
to not seeking the renewal of the special measure once the package of measures Italy intended 
to  apply  was  fully  implemented.  However,  in  2020,  given  that  these  measures  had  been 
recently  implemented,  it  would  have  been  premature  to  fully  assess  their  effectiveness. 
Furthermore, in view of the difficulties caused by the COVID-19 pandemic, taxable persons 
had more difficulties to implement the required changes in their invoicing systems, as did tax 
administrations to adapt their control and IT-systems. For these reasons, the authorisation to 
continue  applying  the  split  payment  mechanism  was  extended  by  Council  Implementing 
Decision  (EU)  2020/11054  until  30  June  2023.  Subsequently,  the  derogation  was  extended 
once  again  until  30  June  2026  by  Council  Implementing  Decision  (EU)  2023/15525.  Under 
the latest extension, companies listed on the stock exchange were excluded from the scope of 
the derogation measure as of 1 July 2025. 

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) 
2018/5936. The electronic transmission of data on daily charges requires taxpayers engaged in 

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Council  Implementing  Decision  (EU)  2017/784  of  25  April  2017  authorising  the  Italian  Republic  to 
apply  a  special  measure  derogating  from  Articles  206  and  226  of  Directive  2006/112/EC  on  the 
common system of value added tax and repealing Implementing Decision (EU) 2015/1401, OJ L 118, 
6.5.2017, p. 17. 
Council  Implementing  Decision  (EU)  2020/1105  of  24  July  2020  amending  Implementing  Decision 
(EU) 2017/784 authorising the Italian Republic to apply a special measure derogating from Articles 206 
and 226 of Directive 2006/112/EC on the common system of value added tax, OJ L 242, 28.7.2020, p. 
4. 
Council  Implementing  Decision  (EU)  2023/1552  of  25  July  2023  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, OJ L 188, 27.7.2023, p. 45. 
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. 

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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.  

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. 

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 2024, in general, was 74 days while 
in requests referred to taxable persons under the split payment, the average was of 60 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 only until 30 June 2029 (as opposed to 31 December 2029, 
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 
regards the average time needed to effectively refund the VAT to these taxable persons and 

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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 age7 . One of the main objectives 
of the proposal to fight VAT fraud by implementing digital reporting requirements based on 
e-invoicing.  This  reform,  adopted  by  the  Council  on  11  March  2025,  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) 2019/3108 Poland was granted a similar derogation 
to apply the split payment mechanism. This derogation was initially granted until 28 February 
2022,  then  extended  until  28  February  20259  and  subsequently  extended  until  29  February 
202810.  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 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 

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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. 
Council Implementing Decision (EU) 2025/373 of 18 February 2025 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, 
2025/373, 28.2.2025. 

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simplify  the  procedure  for  collecting  VAT  or  to  prevent  certain  forms  of  tax  evasion  or 
avoidance. 

• 

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 and to companies that are state-controlled, 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, 
and  to  companies  controlled  by  central  and  by  local  authorities.  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 

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has been implemented with its full scope. Italy fears that the elimination of the measure could 
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  legislation11.  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 2024 was 74 days while in requests under the split payment the average 
was of 60 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. 

11 

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

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2026/0146 (NLE) 

Proposal for a 

COUNCIL IMPLEMENTING DECISION 

amending Implementing Decision (EU) 2017/784 authorising the Italian Republic to 
apply a special measure derogating from Articles 206 and 226 of Directive 2006/112/EC 
on the common system of value added tax 

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), first subparagraph, thereof, 

Having regard to the proposal from the European Commission, 

Whereas: 

(1) 

(2) 

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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  the  scope  of  the  special  measure  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.  The  special  measure 
was  further  extended  until  30  June  2023  by  Council  Implementing  Decision  (EU) 
2020/11054  and  subsequently  until  30  June  2026 by  Council  Implementing  Decision 
(EU) 2023/15525. Under Implementing Decision (EU) 2023/1552, companies listed on 
the stock exchange were excluded from the scope of the special measure as of 1 July 
2025. 

OJ L 347, 11.12.2006, p. 1, ELI: http://data.europa.eu/eli/dir/2006/112/oj. 
Council Implementing Decision (EU) 2015/1401 of 14 July 2015 authorising Italy to introduce a special 
measure  derogating  from  Articles  206  and  226  of  Directive  2006/112/EC  on  the  common  system  of 
value added tax (OJ L 217, 18.8.2015, p. 7, ELI: http://data.europa.eu/eli/dec_impl/2015/1401/oj).  
Council  Implementing  Decision  (EU)  2017/784  of  25  April  2017  authorising  the  Italian  Republic  to 
apply  a  special  measure  derogating  from  Articles  206  and  226  of  Directive  2006/112/EC  on  the 
common system of value added tax and repealing Implementing Decision (EU) 2015/1401 (OJ L 118, 
6.5.2017, p. 17, ELI: http://data.europa.eu/eli/dec_impl/2017/784/oj).  
Council  Implementing  Decision  (EU)  2020/1105  of  24  July  2020  amending  Implementing  Decision 
(EU) 2017/784 authorising the Italian Republic to apply a special measure derogating from Articles 206 
and 226 of Directive 2006/112/EC on the common system of value added tax (OJ L 242, 28.7.2020, p. 
4, ELI: http://data.europa.eu/eli/dec_impl/2020/1105/oj). 
Council  Implementing  Decision  (EU)  2023/1552  of  25  July  2023  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 (OJ L 188, 27.7.2023, p. 45, ELI: http://data.europa.eu/eli/dec_impl/2023/1552/oj). 

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(3) 

(4) 

(5) 

(6) 

(7) 

(8) 

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By  letter  registered  with  the  Commission  on  9  October  2025,  Italy  requested  an 
authorisation to continue to apply the special measures until 31 December 2029.  

In  accordance  with  Article  395(2),  second  subparagraph,  of  Directive  2006/112/EC, 
the Commission transmitted the request made by Italy to the other Member States by 
letter  dated  27  April  2026.  By  letter  dated  28  April  2026,  the  Commission  notified 
Italy that it had all the information necessary for the appraisal of 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  mandatory 
electronic  invoicing  authorised  by  Council  Implementing  Decision  (EU)  2018/5936, 
has  replaced  other  control  measures  and  allows  the  Italian  tax  authorities  to  cross-
check the different operations declared by  taxable persons 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, the recovery of VAT amounts due from taxable persons engaged 
in tax fraud or evasion might be impossible after the cross-check has been carried out 
because, in the meantime, those taxable persons might have become 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. 

One of the effects of the special measure is that suppliers, which are 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 the VAT paid on their input from the tax authorities. According 
to the information provided by Italy, taxable persons carrying out transactions subject 
to the special measure are entitled to receive the payment of the relevant VAT credits 
as a priority, up to the limit of the credit deriving from such transactions. That practice 
requires that refund requests related to the special measure are processed as a priority 
both during preliminary investigation and during the payment of sums due from non-
priority refunds. 

Italy  repeatedly  committed  itself  to  not  seeking  the  renewal  of  the  special  measure 
once  the  package  of  measures  Italy  intended  to  apply  was  fully  implemented. 
However, Italy now considers that, given the effectiveness of the special measure and 
its  synergies  with  other  applied  measures,  in  particular  with  mandatory  electronic 
invoicing,  the  special  measure  should  be  extended  to  avoid  a  setback  in  the  efforts 
made to reduce the VAT gap in Italy. The authorisation to apply the special measure 
should  therefore,  for  the  last  time,  be  extended  until  30  June  2029.  In  fact,  as 
authorisations  for  special  measures  that  derogate  from  the  general  VAT  rules  only 
constitute  a  means  of  last  resort,  Italy  should  strengthen  and  take  full  benefit  of  its 
conventional  means  to  fight and prevent  VAT fraud and, where necessary, introduce 
new  ones  up  to  the  point  that  a  further  extension  of  the  special  measure  would  no 
longer be necessary beyond the end of June 2029. 

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 
14, 
tax 
of 
ELI: http://data.europa.eu/eli/dec_impl/2018/593/oj). 

19.4.2018, 

system 

added 

value 

(OJ 

99, 

p. 

L 

EN 

8 

  EN 

 
(9) 

To guarantee the necessary follow-up within the framework of the special measure and 
in  particular  to  assess the impact  on VAT refunds to  taxable persons  covered by  the 
special measure, Italy should submit a report to the Commission by September 2027. 
That report should address the overall situation of, and in particular the average time 
needed  for,  VAT  refunds  to  taxable  persons,  and  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 those measures, 
together with their date of entry into force. 

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

(11)  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. 

(12) 

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

HAS ADOPTED THIS DECISION:  

Article 1 

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

in Article 3, second paragraph, the date ‘30 September 2024’ is replaced by the date 

(1) 
‘30 September 2027’; 

(2) 

in Article 5, the date ‘30 June 2026’ is replaced by the date ‘30 June 2029’. 

This Decision is addressed to the Italian Republic. 

Done at Brussels, 

Article 2 

For the Council 
The President 

EN 

9 

  EN