The Italian Tax Authority (ITA) has clarified that UK entities need to appoint a fiscal representative to register for VAT in Italy.
Previously, businesses based in the UK were entitled to direct registration as they were located in an EU member state. However, from 1 January 2021, the UK exists as a third country in relation to the EU.
The Brexit deal could restore direct VAT registration
Direct VAT registration is available by default to businesses located in a EU member state. In principle, direct registration may also be extended to businesses located in countries that have signed a reciprocal agreement.
Authorities point out that the trade agreement concluded between the UK and EU might serve as the basis for a reciprocal agreement that would permit direct VAT registration of UK businesses. However, such a conclusion is pending a thorough review of the UK-EU agreement by Italian authorities.
Get advice to plan effectively
For now, UK businesses should consider updating their VAT registration through a fiscal representative in Italy.
Given the uncertainty surrounding the ITA’s decision, UK businesses operating in Italy should seek expert advice on how to prepare for all potential regulatory changes.
Brexit uncertainty remains
The draft trade agreement between the UK and EU provides welcome clarity on a number of issues. However, further negotiations could potentially lead to new opportunities.
For example, the agreement confirms that UK financial firms will no longer enjoy passporting rights in Europe. However, the UK government has expressed a hope that further negotiation could improve access to Europe for UK financial firms.
In addition, businesses should be aware that the terms of the agreement still need to be carefully studied by all relevant parties, and tested in the real world.
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