Executive summary

Two new Ministerial Decrees in Italy address new requirements for (1) those acting as tax representatives and (2) represented entities that operate, or are intending to operate, in the European Union (EU) through a representative. The Decrees provide implementing provisions related to measures introduced in Legislative Decree 12 February 2024, No. 13, known as "Assessments Decree."

In particular, the Ministerial Decree of 9 December 2024 (not yet published in the Official Gazette and, thus, not yet in force), concerns procedures implementing new provisions for those operating as tax representatives pursuant to Article 17, paragraph 3 of Presidential Decree No.633/72. And, the Ministerial Decree of 4 December 2024 (published in the Official Gazette on 13 December 2024), concerns implementation of new provisions for represented entities that operate, or are intending to operate intra-EU, through the appointment of a representative in Italy.

Legislative Decree 12 February 2024, No. 13, was issued to prevent and combat value-added tax (VAT) evasion and fraud. This Decree significantly amended the VAT Decree (Presidential Decree No. 633/1972), particularly concerning the obligations and rights of nonresident entities without a permanent establishment in Italy. Specifically, Article 4 of Legislative Decree No. 13/2024 introduced new conditions for the activities of tax representatives and for nonresident entities in the European Union (EU) and the European Economic Area (EEA) that, through a tax representative, are registered or intend to register for the VAT Information Exchange System (VIES) to conduct intra-EU transactions.

The following two charts summarize the changes.

Background

To prevent and combat VAT evasion and fraud, Article 4, paragraph 1, letter a) of Legislative Decree No. 13/2024 — issued in implementation of the fiscal delegation Law (Law No. 111/2023) — amends some provisions of the VAT Decree (i.e., Presidential Decree No. 633/1972), concerning cases in which the obligations or rights arising from the application of VAT rules are provided for nonresident entities without a permanent establishment in the State.

Specifically, Article 4 of Legislative Decree No. 13/2024 provides:

• New conditions for the activity of tax representatives in the State, namely the possession of specific integrity requirements and the obligation to provide a financial guarantee scaled according to the number of represented entities (Article 17, paragraph 3 of Presidential Decree No. 633/1972)
• The obligation to provide a guarantee for nonresident entities in the EU and EEA that, through a tax representative, are registered or intend to register for VIES to conduct intra-EUEU transactions (Article 35, paragraph 7-quater of Presidential Decree No.633/72)

The two Decrees issued to implement the new regulations are:

1. The Ministerial Decree of 9 December 2024 (not yet published in the Official Gazette and, for this reason, not yet in force)
2. The Ministerial Decree of 4 December 2024 (published in the Official Gazette on 13 December 2024)

For the two regulations to be fully effective, however, a double measure (i.e., two additional provisions) from the Director of the Italian Revenue is still needed, to which the operational aspects (e.g., the model for establishing the guarantee) have been delegated.

For both required measures, a mandatory deadline for their issuance is set at 120 days from the date of publication in the Official Gazette of the relevant Ministerial Decree.

Regardless, only the Ministerial Decree of 4 December 2024, was published in the Official Gazette on 13 December 2024. For this reason, it currently appears, based on the measures contained in this latest Decree, that the Italian Revenue Director's related provision must be issued by the next 13 April 2025.

Below is a brief analysis of the main innovations contained in the Ministerial Decrees.

New obligations for tax representatives

Subjective requirements for the tax representative

Regarding the new conditions required for the institution of tax representation, the Ministerial Decree of 9 December 2024 provides that the tax representative, regardless of where the nonresident represented entity was established (another EU State or non-EU State), must possess the "subjective requirements" referred to in Article 8, paragraph 1, letters a), b), c), and d) of Ministerial Decree No. 164/1999, which are:

1. Must not have been convicted, even if not final, for financial crimes, nor have concluded an agreement for the application of the penalty upon request of the parties in relation to the same
2. Must not have pending criminal proceedings in the judgment phase for financial crimes
3. Must not have committed serious and repeated violations, by their nature and extent, of the provisions on contributions and taxes
4. Must not be in one of the conditions provided for by Article 15, paragraph 1 of Law No. 55/1990 (i.e., ineligibility and inability to hold certain positions)

Furthermore, as provided in the Assessments Decree, the above requirements must be possessed by any legal representative of the entity intended to be appointed as a tax representative.

Any entity intending to serve as tax representative must certify the above requirements by submitting an affidavit to the Italian Revenue office based in the entity's tax domicile.

Object, characteristics and duration of the guarantee

As anticipated, the Ministerial Decree of 9 December 2024, in implementation of the new provisions, identifies the criteria under which the tax representative can assume such a role only after providing an appropriate guarantee, scaled in relation to the number of represented entities.

Entities possessing the subjective requirements can be appointed as tax representatives upon providing an appropriate guarantee. This guarantee must be provided in the form of: (1) a deposit in government bonds guaranteed by the State, or (2) a bank guarantee or surety policy, issued under Article 1 of Law No. 348/1982, in favor of the Director pro tempore of the Italian Revenue office based in the tax representative's tax domicile and delivered in person to the same Director.

The minimum/maximum value of the guarantee is determined based on the number of represented entities, and the obligations of the tax representative arising from the application of VAT rules must be guaranteed at least for the maximum value of:

• €30k for tax representatives representing from 2 to 9 entities
• €100knfor tax representatives representing from 10 to 50 entities
• €300k for tax representatives representing from 51 to 100 entities
• €1m for tax representatives representing from 101 to 1,000 entities
• €2m for tax representatives representing more than 1,000 entities

If the number of represented entities increases, the guarantee must be provided with the corresponding minimum value, presenting the relevant documentation to the Italian Revenue office in the appropriate territory.

The guarantee is not required for entities assuming only one representation, as it is sufficient to present the substitute declaration of affidavit.

The duration of the guarantee cannot be less than 48 months from the date of assuming the role of tax representative, which coincides with the date the guarantee is delivered to the Italian Revenue office in the appropriate territory.

If a tax representative that has already provided a guarantee based on the representation of a certain number of entities later begins to represent additional entities, a different minimum value will be required under a new guarantee. The representative must provide a new guarantee, presenting it to the Italian Revenue office competent based on their tax domicile, with the minimum value appropriate to the new amount of all represented entities.

In such cases, the new guarantee must be provided for a minimum of 48 months from the guarantee's date of delivery to the Italian Revenue office competent based on the tax domicile of the tax representative.

If the representative assumes additional representations after already providing the guarantee with a certain minimum value, but the total number of represented entities remains within the threshold for which the same maximum value is established, no new guarantee is required.

Moreover — except for an increase in the number of represented entities — the guarantee does not need to be re-presented once the minimum period of 48 months has elapsed.

Entities already possessing a tax representative (transitional rule)

A specific transitional regime is provided for entities that are already operating as tax representatives on the date of the Italian Revenue measure that must be adopted within 120 days after the 9 December 2024 Ministerial Decree is in the Official Gazette.

In particular, within 60 days from the same date, the tax representative must certify, in an affidavit, that it meets the subjective requirements and must provide an appropriate guarantee in the manner described above.

Potential consequences for noncompliance with regulations

In case of failure to submit the affidavit or the guarantee, the Italian Revenue will notify the tax representative, via certified electronic mail or registered mail with return receipt, of the initiation of procedures to officially terminate the represented entity's VAT number.

Sixty days after the tax representative receives the notification, the Italian Revenue will proceed with official termination of the represented company's VAT number, unless the tax representative has taken action to correct the noncompliance.

New obligations for entities possessing a tax representative in Italy

As anticipated, the Ministerial Decree of 4 December 2024, defines the conditions and procedures for providing the guarantee required by Article 35, paragraph 7-quater of Presidential Decree No. 633/1972, which pertains to represented entities that, as a result of the appointment of a tax representative in Italy, intend to conduct intra-EUEU transactions.

The regulation applies only to entities that are not resident in the European Union or in one of the other EEA States (Iceland, Liechtenstein and Norway).

In general, the regulation governs the criteria and procedures for providing the appropriate guarantee that must be presented to obtain inclusion — and permanence — within the database of taxable entities conducting intra-EUEU transactions (i.e., VIES - VAT Information Exchange System).

Object, characteristics and duration of the guarantee

The guarantee is provided in favor of the Director pro tempore of the appropriate Italian Revenue office, based on the tax representative's tax domicile, and the value of the guarantee must be at least €50k. The guarantee must be delivered, personally or through the tax representative, to the competent Italian Revenue office.

The establishment of a minimum amount allows the taxpayer to offer greater coverage, if deemed appropriate.

As mentioned, providing the guarantee is a necessary condition for registering the VAT number of the represented entity in the database of taxable entities conducting intra-EUEU transactions (i.e., VIES).

The guarantee must be provided by the nonresident entity for a period of at least 36 months, starting from the date of delivery of the same to the Italian Revenue office, after which the taxpayer becomes free to operate without renewing the guarantee.

Entities already registered with VIES (transitional rule)

Entities that are already included in the VIES database when the measure of the Director of the Italian Revenue containing the implementing provisions of the Decree (to be issued by next 13 April 2025) is published, must provide the guarantee within 60 days from the publication of the aforementioned measure (approximately, therefore, around 13 June 2025), fulfilling the obligations prescribed by the Decree.

Potential consequences in case of noncompliance with regulations

Failure to provide the guarantee will result in the exclusion from the VIES database of the concerned entity's VAT number.

Once the Italian Revenue has ascertained the failure to provide the guarantee within the assigned terms, Revenue will inform the nonresident entity's tax representative that procedures have been initiated to exclude the entity's VAT number from the database of taxable entities conducting intra-EUEU transactions (VIES).

Sixty days after the date of receipt of the notification by the tax representative, Italian Revenue will proceed with the official exclusion of the VAT number of the represented entity from the aforementioned database.

Implications

Affected entities that will need to comply with the new obligations introduced by Legislative Decree No. 13/2024 should contact their tax advisors. For example, a knowledgeable tax advisor can assist tax representatives in verifying and certifying the integrity requirements, preparing and submitting the required financial guarantees, and managing the VIES registration procedures for nonresident entities.

Additionally, strategic and operational assistance can help ensure compliance with the new regulatory provisions, mitigate the risk of penalties and bolster business processes in the VAT area.