Revenue Agency clarifications on Split Payment

The circular also illustrates the interconnections with reverse charges and electronic invoicing
15/04/2015 – Even the commissioners appointed for reconstruction following disasters who
manage funds with special accounts, the consortia of mountain water catchment areas and the inter-university
consortia must apply the rules governing the splitting of VAT payments.
This is clarified by Circular 15/E by the Italian Revenue Agency, which expands the number of public
entities that benefit from the split payment mechanism, in addition to those included on the list
in Circular 1/E.
This Revenue Agency circular clarifies that Split Payment applies to the public entities that, albeit
not falling within those expressly listed in Art. 17-ter of Pres. Decree 633/1972, are their
immediate and direct expression, such as, precisely, the commissioners appointed for reconstruction
following disasters and inter-university consortia.
The Revenue Agency points out that non-economic public entities independent from the state
structure, which pursue own purposes, albeit of general interest, and non-public social security institutions
remain instead outside of the beneficiaries of the split payment mechanism.
We remind you that the Split Payment was introduced by the 2015 Stability Law to reduce
tax evasion relating to VAT. To achieve this, Public Administration (PA)
splits the payment, i.e. pays the price of the good or service to the supplier and pays the VAT
directly to the State, so that whoever collects the invoice payment does not then “forget” to
pay the tax to the State.
The Revenue Agency also clarifies that for purchases made by PA, as part of its non-commercial
institutional activities, the value added tax is paid with no
option of tax offsetting. This, therefore, excludes the possibility for the buyer administration to
use the VAT due for operations under the split payment scheme in
horizontal offsetting with other tax credits claimed.
The circular specifies that, with reference to the purchase of goods and services intended for mixed use
in both non-commercial activities and in business, PA –
non-taxable person – must first identify, with objective criteria, the part of the relative
tax to be charged respectively to the two different activities, for which the entity is required
to fulfil the related obligations separately.
The circular clarifies that split payment transactions give the right to priority disbursement
if the condition for reimbursement is that of the “average rate”, always taking into account
the limit on the amount of tax applied to such transactions in the reference period; it is therefore
possible that the reimbursement from split payment is priority only for a part of the amount, while the
the remaining part remains subject to ordinary execution.
In the event that the taxpayer who carries out transactions subject to the split payment mechanism
fails to meet the requirements to request reimbursement under the “average rate” condition,
he can still ask for it, but in this case the disbursement will follow the ordinary channels.
The split payment mechanism applies to transactions for which the consideration was
paid after 1 January 2015, as long as they were not already invoiced before
this date. Split payment is not applicable, on the other hand, to transactions for which the
invoice was issued up to 31 December 2014 and which were performed within the past year. Consequently,
for these transactions, PA must pay the supplier both the taxable amount and the tax
even if the payment is made after 1 January 2015. The circular states that in this case it is
irrelevant whether the invoice, issued in 2014, was registered by the buyer PA in
In the event that the PA – as a taxable person – receives an irregular invoice, it must apply
the regularization procedure. In the event that the supplier issues a notice of increase,
the split payment mechanism shall still be applicable and, therefore, the
notice must be numbered, indicating the amount of the variation and the related tax and
including clear reference to the original invoice issued.
If the notice, on the other hand, is of a decrease and refers to an invoice applying split
payment, the notice must still be numbered, indicating the amount of the variation, the relative
tax and reference to the original invoice; however, since it is an adjustment made to VAT
that was not included as part of the supplier’s regular clearance, the supplier shall not have the right to
deduct the tax corresponding to the variation, but shall be restricted to making a special
entry of correction in the register, without any effect in the VAT payment.