Italy - Tax Representatives and Non-EU Taxable Persons to Provide Financial Guarantees

January 21, 2025

Two Ministerial Decrees adopted in December 2024 introduced more strict rules and requirements regarding the appointment of tax representatives and registration in the VAT Information Exchange System (VIES) archive. New obligations are imposed on the tax representatives and non-EU taxable persons carrying out taxable transactions in Italy or intending to carry out intra-community transactions subject to the VIES database.

Impact on Tax Representatives and Non-EU Taxable Persons

Any individual who wants to become a tax representative must meet specified conditions, including not being convicted, sentenced, or having pending criminal proceedings for financial violations, not committing any serious and repeated violations of the contributions and taxation legislations, and not being eligible or able to hold certain offices. If the tax representative is a legal entity, its legal representative must meet all stated conditions.

Tax representatives must also submit self-declarations to the competent Tax Authority stating that they meet all conditions and requirements. In addition, they must provide a valid guarantee for 48 months. The guarantee amount is based on the number of entities represented, ranging from EUR 30,000 for representing two to nine entities to a maximum of EUR 2 million for representing more than 1,000 entities.

Government securities, state-guaranteed securities, bank guarantees, or a surety policy may all be provided as a guarantee.

Non-EU taxable persons who appoint tax representatives must provide the Italian Tax Authority with a guarantee of at least EUR 50,000 in one of the mentioned forms, valid for a minimum of 36 months. After the guarantee period ends, non-EU taxable persons can operate without further obligation to provide financial guarantees.

Non-EU taxable persons who already operate in Italy and have a tax representative will have 60 days after the publication of implementing rules to provide required guarantees.

Conclusion

For these two Ministerial Decrees to take effect, the Tax Authority must issue implementing rules, which are expected to occur by May 2025. Suppose tax representatives or non-EU taxable persons do not comply with regulations or meet stated conditions and requirements. In that case, they will lose the ability to act as tax representatives and taxable persons will be removed from the VIES archive.

Source: PwC

What are the new financial guarantee requirements for tax representatives in Italy?

Tax representatives must provide a financial guarantee valid for 48 months, ranging from EUR 30,000 to EUR 2 million, depending on the number of entities they represent.

Who is affected by the new Italian tax regulations on financial guarantees?

The regulations apply to tax representatives and non-EU taxable persons conducting taxable transactions in Italy or intra-community transactions subject to VIES registration.

What forms of financial guarantees are accepted under the new Italian tax rules?

Accepted guarantees include government securities, state-guaranteed securities, bank guarantees, and surety policies, ensuring compliance with the new requirements.

What are the eligibility criteria to become a tax representative in Italy?

Tax representatives must not have criminal convictions, financial violations, or pending criminal proceedings and must meet specific professional and ethical standards.

When will the new financial guarantee requirements take effect?

The rules will take effect once implementing regulations are published, expected by May 2025, after which compliance must be ensured within 60 days.

What happens if tax representatives or non-EU taxable persons fail to comply?

Non-compliance may result in the removal from the VAT Information Exchange System (VIES) and loss of the ability to operate as a tax representative in Italy.

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