- Italian government establishes €1bn fund to repay outstanding VAT rebates
- Total due likely to be several billion Euros, meaning this fund is just the “tip of the iceberg”, according to KPMG
The Italian Government has set aside €1bn for VAT repayments to large businesses in response to EC infraction proceedings for its failure to repay VAT rebates due within reasonable time limits imposed by European law.
According to KPMG in the UK (which has been pursuing these rebates on behalf of clients) this latest move means that businesses owed VAT rebates from Italy should now expect to receive the funds they are due. KPMG has a small group of clients who, collectively, are due almost €500m and believes that several billion Euros are likely to be owing, meaning that this fund is likely to be just the first step in paying back all that is due.
Commenting on the Italian Government’s announcement, Gary Harley, Head of Indirect Tax at KPMG in the UK, said: “Following the European Commission’s announcement last month that it is to launch infraction proceedings against the Italian government for its habitual failure to repay legitimate VAT refunds due to businesses, it appears that the Italian government are seeking to appease the Commission by setting aside funds to meet these obligations. This appears to be the first tangible effect of a complaint that KPMG in the UK brought to the Commission on behalf of a small group of multi-national companies who, collectively, are owed almost €500m in VAT refunds. Other taxpayers are likely to be in similar positions so, collectively, there is likely to be several billion Euros owing.
“To be clear, this is Italian VAT that the businesses involved have paid to their suppliers, who in turn have paid across the VAT to the Italian authorities. The affected businesses are due this VAT back in the form of a refund as they are in a net VAT repayment position. Taxpayers are currently suffering a significant cash flow penalty through Italy failing to refund VAT receivables for many years. The Italian authorities are not disputing that the refunds are owed but they impose onerous audit processes and bank guarantee requirements upon taxpayers that are seeking approval for repayments of VAT. It seems that pressure from the EC will prompt a number of the refunds due, but we would encourage businesses to proactively seek their refunds now.”
For further information please contact:
Margot Cowhig, KPMG Corporate Communications
Tel: 0207 694 4246 Mobile: 07920 274856: email@example.com
KPMG Press Office: 0207 694 8773
Notes to editors.
KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and operates from 22 offices across the UK with over 12,000 partners and staff. The UK firm recorded a turnover of £1.8 billion in the year ended September 2012. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services. We operate in 156 countries and have 152,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. KPMG International provides no client services.