Sales, Use and International Tax Activity Update - April 2009

Italy Allows Cash Accounting For Small Businesses

Beginning on 25/3/09 businesses with an annual turnover of €200,000 or less have the option of accounting for VAT on the basis of cash received with respect to business-to-business supplies.

Under the new decree payment of VAT can be deferred until payment for the supply has been received. However, there is a one year limit to account for VAT unless the customer enters into bankruptcy procedures during this period.

Businesses choosing to account for VAT on a cash basis must indicate this on the invoice. Customers can only reclaim VAT when the invoice is paid.

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