Executive summary

On 30 December 2024 the Italian Parliament approved the 2025 Budget Law (Law n. 207 of 2024), which was published in the Official Gazette of 31 December 2024. The Italian Parliament had approved other relevant legislation in November 2024. Specifically, Law no. 166 of 14 November 2024, converting Decree-Law no. 131/24 (so called Save-Infringements Decree), was published in the Official Gazette of 14 November 2024, and Legislative Decree No. 180 of 13 November 2024, implementing EU Directive 2020/285 and EU Directive 2022/542, was published in the Official Gazette of 30 November 2024.

This Alert summarizes the key VAT measures that entered into force from 1 January 2025:

• Extension of reverse charge in the logistics sector
• VAT chargeability for training services provided by qualified training entities
• Small businesses VAT scheme
• VAT on online events
• Secondment of staff

Detailed discussion

Extension of reverse charge in the logistics sector

The Italian Budget Law proposes letter "a-quinquies" on par. 6 of Art. 17 of Presidential Decree no. 633 of 1972 (the Italian VAT code), which was previously introduced by Legislative Decree no. 124 of 2019 but never entered into force due to lack of EU approval.

According to the proposed provision, reverse charge is applied to the supply of services carried out through work contracts, subcontracts, assignments to consortium members or contractual relationships however denominated. This supply of services must be characterized by the prevalent use of manpower at the customer's places of business using capital goods owned by the customer or attributable to it in any form and rendered to companies that carry out transport, handling of goods or logistics services. However, reverse charge is not applicable if these supplies of services are rendered to:

• Public administrations and other public bodies (where VAT application is fulfilled through the split-payment mechanism)
• Qualifying employment agencies

The effectiveness of the new rules is subject to the authorization of the Council of the European Union in accordance with Article 395 of the VAT Directive 2006/112/EC.

In the interim, until the Council grants authorization, the supplier and the customer may opt for the VAT payment to be made by the customer in the name and on behalf of the supplier (who remains jointly and severally liable for the VAT due). This option is available for three years and, to inform the Italian tax authorities that the client is utilizing the option, the client must submit a specific form to be approved by the Director of the Italian Revenue.

VAT chargeability for training services provided by qualified training entities

Due to uncertainty generated by various challenges to the VAT law from tax authorities, the Italian Budget law clarifies that VAT is charged when training services are supplied by qualified training entities financed through the bilateral fund pursuant to Art. 12, par. 4, of Legislative Decree No. 276 of 2003, to persons authorized to supply labor, pursuant to Article 4 of Legislative Decree No. 276 of 2003.

The Budget Law provides specific instructions for settling existing challenge proceedings with Italian Revenue or litigation procedures currently in force in the tax courts concerning this issue.

Small businesses VAT scheme

Legislative Decree no. 180/2024, implementing EU Directive 2020/285, introduces a special cross-border scheme for small businesses starting from 1 January 2025. This regime allows small enterprises (based on their turnover) to benefit from the VAT exemption regime for supplies of goods made, or services provided, in a Member State other than their State of establishment. The Decree No. 180/2024 adds specific sections dedicated to the scheme within the Italian VAT code (Presidential Decree no. 633 of 1972).

Online streaming events

Directive 2022/542 is also implemented by Legislative Decree no. 180/2024, which amends the rules on the place of supply for VAT for streaming events. Letters (a) and (b) of Article 7-quinquies of the Italian VAT code (Presidential Decree no. 633 of 1972) are amended according to the EU provisions in force from 1 January 2025, under which place of supply for all business-to-business or business-to-consumer online streaming events is relevant for VAT purposes where the recipient is established or domiciled.

Secondment of staff

Law no. 166 of 14 November 2024 cancelled Art. 8, par. 35, of Law no. 67/1988, which originally stated that secondment of staff against which only the reimbursement of the related cost is paid was not relevant for VAT purposes.

The repeal applies to secondments of staff concluded or renewed as of 1 January 2025. Additionally, the Law introduces a safeguard clause, which provides that tax authorities cannot challenge conduct adopted by taxpayers for which no final assessments have been made before the entry into force of the repeal, either in accordance with the judgment of the EU Court of Justice of 11 March 2020, case C-94/19, or in accordance with Art. 8, par. 35, of Law no. 67/1988.

Implications

These new VAT measures may significantly impact multinational companies by requiring them to review the VAT treatment applied to some of their current business transactions and to align with new rules.

Taxpayers will need to ensure they correctly apply reverse-charge mechanisms to avoid potential compliance issues and take appropriate tax positions.