- The Italian tax authority (FISCO) does not allow for a flat-rate recognition of costs for VAT purposes.
- The inductive reconstruction of revenues can legitimize the flat-rate determination of costs for direct taxes, in accordance with the rulings of the Constitutional Court no. 225/2005 and no. 10/2023.
- However, this determination cannot automatically be reflected in the deductibility of VAT, which remains subject to proof by the taxpayer that the costs are attributable to taxable transactions actually carried out.
- The Court of Cassation, in its order no. 5486 deposited on March 2, 2025, ruled that the mere existence of passive invoices is not sufficient to demonstrate the relevance of costs, nor is it sufficient to overcome the presumption of non-deductibility in the event of a failure to file a tax return.
- The taxpayer bears the burden of proving the actual use of goods and services purchased for taxable transactions, as the mere fact that the suppliers existed is not sufficient.
- The difference between the constituent elements of direct taxes and VAT is decisive: while a flat-rate deduction of costs is possible in the case of inductive assessment for the former, the latter requires analytical proof of the attribution of costs to taxable transactions.
- Consequently, in the event of failure to comply with reporting (and accounting) obligations, the taxpayer risks being denied recognition of VAT deductions if they do not provide adequate proof.
Source: eutekne.info
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
