VAT number: non-EU citizens may need a guarantee

foto digitale - Nicola Dimitri
Nicola Dimitri
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New rules are planned for non-EU foreigners wishing to open a VAT number in Italy

VAT numbers for non-EU citizens: what changes

In the financial maneuver, there is a "rule to counter unfair competition" aimed at hitting those "open and close'" activities attributable to foreigners holding VAT numbers. After starting a business, they do not pay taxes and close before inspections, only to start again similarly.

In these terms, according to the Budget Bill 2023, under certain conditions, foreign nationals from non-EU countries applying to open a VAT number could be required to provide a solvency guarantee of up to 20,000 euros.

The guarantee request, however, would not operate automatically but only if the preliminary investigation does not yield a positive outcome regarding the potential solvency to pay taxes of the applicants.

The guarantee would make it possible to curb the phenomenon of so-called blockheads, i.e., those individuals (very often foreigners) who - with the sole intent of defrauding the tax authorities or paying less tax - fictitiously open or re-open businesses in Italy. They do so on behalf of others, despite being null and void or untraceable.

Through this provision, control is thus intensified on those considered at risk of evasion.

The mechanism would work in this way: the citizen of a non-EU foreign state who applies for the attribution of a new VAT number, after having already closed one and been reported by the IRS, will be required to deposit a special guarantee (bank or insurance). This will amount to 20 thousand euros.

The surety bond is returned only upon the termination of the activity and following verification of all tax and contribution payments.

VAT numbers: the numbers in Italy

According to the latest analysis by the Mef and the update of data from the Observatory on VAT Parcels, 94,080 new VAT parcels were opened in the third quarter of 2022.

New VAT numbers were opened for:
  • 69.7 percent by individuals
  • 21.8 percent by corporations
  • 2.8 percent by partnerships.
Among these, the share of "nonresidents" and "other legal forms" accounted for 5.6 percent of the new openings.

As highlighted by Mef, compared to the third quarter of 2021, there is an overall decline for all legal entities: -56.3 percent nonresidents, -8.5 percent partnerships, -7.8 percent individuals, and -5.2 percent corporations.
Editor and coordinator of the Tax & Legal section at We Wealth. Previously worked in tax law and international taxation at leading law firms.


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