Italy – VAT deductibility for end of the year invoices received in January

In the context of the new Italian tax reform legislation (Law 111/2023, published on 09/08/2023), a new provision allows taxpayers to choose in which period they can exercise their VAT deduction right for transactions from the previous year where the invoices are received in the first 15 days of January.

So far the right to deduct input VAT relating to invoices received and posted by the 15th of the month following the month in which the operation was carried out can be exercised within the payment deadline for the related VAT. However, this position did not apply to purchases invoices related to operations carried out in the previous year, which could only be deducted in January of the following year. With the new tax reform, the taxpayer can choose whether to deduct their input VAT in December or in January.

Example: if an invoice related to a purchase made on the 31st October 2023 is received on the 2nd November 2023, this invoice can be included either in the VAT books for the period of October 2023 (month when the supply took place) or, under the condition that the invoice is accounted for by 15th November 2023, in the VAT books for the period of November 2023 (month when the invoice is received). However, if an invoice related to a purchase made on the 28th December 2024 is received on the 3rd January 2024, previously it couldn’t be included in the December 2023 VAT books. The result of the new tax reform legislation allows the taxpayer to decide whether to include the input VAT within the December 2023 period or the January 2024 period.