Communication in accordance with Article 395 of Council Directive 2006/112/EC

Further information:

On 19 July 2016, Italy requested authorisation to apply a measure derogating from Article 193 of the VAT Directive authorising Italy to apply the reverse charge mechanism for supplies of goods and services to consortia by their members. The aim of the requested derogation is the fight against tax evasion.

As a general rule, the person liable for the payment of VAT to the tax authorities under Article 193 of the VAT Directive is the taxable person supplying the goods. The purpose of the derogation requested by Italy is to place that liability on the taxable persons (consortia in this case) to whom the supplies are made by their members.

Notwithstanding several Commission requests, neither the nature nor the extent of possible fraud problems arising in the relation between consortia and their members has been demonstrated by Italy. It is difficult to see how VAT fraud problems can indeed occur in the relationship between the consortia and the members; the former are supposed to act on behalf of the members. Furthermore, given this particular relationship, it should be possible for Italy to tackle the fraud by adequate control measures.

Consequently, as it is not demonstrated by Italy that the derogating measure is requested in order to fight fraud or in order to simplify procedures for taxable persons and/or tax administrations, the request does not fulfil the conditions laid down in Article 395 of the VAT Directive.