In response to inquiry number 431/2023, the Italian Revenue Agency has clarified the conditions for applying VAT and the potential adjustment of deductions when assets are removed from a business and subsequently transformed into a simple partnership under Law 197/2022. If there are no specific VAT exemptions, the Italian tax code, in line with the EU directive, considers the removal of assets as subject to VAT, excluding assets for which no VAT deduction was made upon purchase.
In cases where real estate assets are removed, Article 10, paragraphs 8-ter, of the Italian tax code applies, which establishes the natural regime of VAT exemption, with the option for the company (during the “transfer”) to choose the taxable regime under certain conditions.
The transformation of a business into a simple partnership, as in this case, constitutes an operation subject to VAT (either under the exemption or taxable regime). However, the VAT treatment for assets for which VAT deductions were made follows different criteria than those for deduction adjustments.
The relevance of VAT regarding the removal of assets is determined by different conditions compared to those governing deduction adjustments. Therefore, in the case mentioned, where the company had fully deducted VAT on the assets to be removed, there is no obligation to make adjustments, provided that the transformation occurs before September 30, as the protective period has elapsed.
Source: eutekne.info
