Sales, Use and International Tax Activity Update - August 2009

Italy Defies European Court of Justice on VAT

Under current procedure Italy requires taxable persons with head offices located outside of Italy to file Eighth or Thirteenth Directive claims to recover input VAT rather than allowing them to claim the credit on their Italian VAT return even though they have a fixed establishment in Italy.

In infringement proceedings against Italy the European Court of Justice has ruled that this violates those Directives as well as the Principal VAT Directive (2006/112/EC). Italy must now correct the way it implements the Directives so it is no longer in violation.

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