Executive summary

Among the significant tax measures introduced in Law Decree No. 84/2025, published in the Official Gazette on 17 June 2025, are new provisions relevant for value-added tax (VAT) purposes:

The Law Decree entered into force on 18 June 2025. The Parliament must now convert the Decree into Law, with possible changes, within 60 days. (For background, see EY Global Tax Alert, Italy extends deadline for tax-hybrid penalty protection regime, dated 19 June 2025.)

Expansion of reverse-charge mechanism to transport and logistics sectors

The Italian Budget Law (Law No. 207/2024) — entering into force on 1 January 2025 — introduced, among other things, some VAT measures involving the transport and logistics sector.

In particular, Article 1, paragraph 57 of 2025 Budget Law extended the application of the reverse-charge mechanism to supplies of services carried out through work contracts, subcontracts, assignments to consortium members and contractual relationships characterized by the predominant use of labor at the client's premises with the use of assets owned by or otherwise attributable to the client, provided to companies engaged in transport and goods-handling activities and logistics services.

Nevertheless, because the underlying aim of the reverse-charge mechanism is to reduce the risk of fraudulent schemes, Article 9, para. 1 of Fiscal Decree no. 84/2025 removes the application constraints related to the contractual features from Article 1, paragraph 57, of Law No. 207 of 30 December 2024.

These features are defined in the Illustrative Report of the Fiscal Decree as objective characteristics of the contract that are not found in traditional contracts for the transport of goods.

The effectiveness of this provision is subject to prior authorization from the Council of the European Union, as it constitutes a derogation from the ordinary VAT application regime, pursuant to Article 395 of the European Union VAT Directive.

The Article 1, paragraph 59 of the Italian Budget Law established that in the interim period (until the reverse charge is authorized), the supplier and the customer may elect to shift responsibility for making VAT payments to the customer, which will act in the name of and on behalf of the supplier (and the supplier will remain jointly and severally liable for the VAT due). The election will last for three years and must be communicated by the customer to the tax authorities using a specific form, which must be approved by the tax authorities.

Furthermore, to avoid potential interpretative doubts about the correct application of the interim provisions, Article 9, paragraph 2, letter b) adds to Article 1, paragraph 59 that the option may be exercised bilaterally also by all parties involved in the subcontracting chain.

As explained in the Illustrative Report to the Fiscal Decree, the option exercised by a subcontractor is not contingent upon the other subcontractors and sub-subcontractors having also exercised the same option, nor is it necessarily dependent on the client and the primary contractor. Therefore, the exercise of the option by the client and the primary contractor is not a prerequisite for the subcontracting relationships to exercise the same option. Consequently, for purposes of exercising the option, each subcontracting relationship may be considered autonomous from the others, as well as from the relationship between the client and the primary contractor. Naturally, all agreements concluded during the subcontracting phase are subject to the provisions contained in paragraphs 59 to 63 of Article 1 of Law No. 207 of 2024.

Therefore, the supplier issues the invoice according to the general VAT rules under Article 21 of Presidential Decree No. 633/72, and the customer pays the VAT using the F24 form, without the possibility of offsetting VAT against other taxes and by the 16th day of the month following the month in which the relevant invoice was issued.

End of split payment for FTSE MIB listed companies

Article 17-ter of Presidential Decree No. 633 of 26 October 1972 allows the split-payment mechanism to be applied in transactions involving public administrations and other specific entities and companies.

Under the split-payment mechanism, in contrast to the ordinary VAT regime, the obligation to pay the VAT falls directly on the customers, provided they are public administrations or one of the other entities identified in Article 17-ter, paragraph 1-bis, of Presidential Decree No. 633 of 1972 (essentially, all public administrations, companies controlled by state or local public administrations, and listed companies included in the FTSE MIB index).

As a result of the new provisions, transactions carried out with companies listed on the stock exchange and included in the FTSE MIB index of the Italian Stock Exchange, identified for VAT purposes and invoiced from 1 July 2025, will no longer be subject to the split-payment mechanism.

This amendment aims to align the national regulation with the Council Implementing Decision (EU) 2023/1552, published in the Official Journal of the European Union on 27 July 2023. Although the Council Implementing Decision extends Italy's authorization to apply the split-payment mechanism until 30 June 2026, it also excludes from scope, as of 1 July 2025, the supply of goods and services to listed companies included in the FTSE MIB index (pursuant to letter d) of paragraph 1-bis of Article 17-ter of Presidential Decree No. 633 of 1972).

Extension of VAT payment deadlines for 2024 balance and 2025 advance payments

The Article 13 of the Fiscal Decree no. 84/2025 postpones to 21 July 2025 (from 30 June 2025) the payment of the 2024 balance and the 2025 advance payment for Isa subjects and for flat-rate taxpayers, without a surcharge.

Payments made from 22 July 2025 to 20 August 2025 will be accepted with a 0.40% surcharge.

Implications

Companies interested to the extension of the reverse charge and to the termination of the split payment will need to change their invoicing processes in order to adapt them to the new requirements. This can require changes to the ERP invoicing settings.