Covid contributions and tax losses: clarifications on carryforward and taxation
The Ministry of Economy and the Italian Tax Office have clarified that companies that received contributions during the Covid-19 emergency and closed their accounts at a tax loss must exclude these contributions from the calculation of carryover losses. According to the official interpretation, these aids should be considered as exempt income, pursuant to Article 84 of the TUIR, and cannot generate future tax benefits. This position has led to numerous assessments throughout Italy, with requests for tax recovery and penalties, even for incorrect declaration filling. The rationale is that the tax exemption granted at the time of disbursement translates, for loss-making companies, into deferred taxation at the time of utilizing the loss. The original regulation (Article 10-bis of DL 137/2020) provided for the non-inclusion of contributions in income but did not clarify the effects on the carryover of losses. The Agency distinguishes between “exempt” income (not taxed and facilitating) and “excluded” income (already taxed or to be taxed), arguing that the absence of an explicit reference to Article 84 indicates the intention to limit the benefit to the year of collection only.
VAT deduction and supplementary declarations: clarifications from the Italian Tax Office
With response to inquiry no. 115/2025, the Italian Tax Office clarified a crucial point for businesses: the recovery of non-deducted VAT through an additional declaration is only possible if the invoices have been timely recorded in the VAT registers for the year of receipt. Otherwise, the right to deduction is considered permanently lost. The current regulations, amended by DL 50/2017, establish that the right to deduction arises with the enforceability of the tax and can be exercised within the annual declaration related to the year in which the right arose, provided that the invoice has been properly recorded. In the case examined, a company received invoices in 2023 but only recorded them in 2024, even within the deadline for submitting the 2023 VAT declaration. However, having not exercised the right to deduction within the prescribed time and not having recorded the invoices within the correct period, it can no longer recover the VAT through an additional declaration. Furthermore, the Agency could impose a penalty of 70% of the non-deducted tax, even if the taxpayer acted with caution and good faith. This creates a paradoxical situation: those who do not deduct to avoid mistakes still risk being penalized.
Shell company: first three years of activity excluded from the operational test
The Court of Cassation, with the ruling No. 22007 of July 30, 2025, clarified a crucial point regarding shell companies: the operational test provided for by Article 30 of Law 724/1994 cannot be applied in the first three years of a company’s existence. This is because the first year of activity, considered a physiological start-up phase, is not deemed indicative of the company’s actual productive capacity. Consequently, as it is not possible to construct a complete three-year observation period, the presumption of non-operation cannot take effect
until the fourth year. The Cassation has reiterated that the presumptive verification requires accounting data from three closed fiscal years, and in their absence, the Italian Tax Office must demonstrate non-operation directly, without relying on the reversal of the burden of proof. In the context of VAT, the Court referenced European jurisprudence, emphasizing the incompatibility of Italian regulations with the principles of neutrality and proportionality established by Directive 2006/112/EC. Therefore, the limitation of the right to VAT deduction based on presumptions is unlawful and must be disregarded. However, the Italian Tax Office maintains a different position, arguing that the operational test should still apply, even in the absence of a complete three-year period, including the first year in the calculation. This contrast between jurisprudence and administrative practice requires newly established companies to conduct careful evaluations to avoid litigation and divergent interpretations.
VAT refund and non-resident subjects with a permanent establishment: clarifications and limits
A recent response to a query from the Italian Tax Office (n. 33/2025) has reignited the debate on the possibility for non-resident entities with a permanent establishment (P.E.) in Italy to obtain a refund of excess deductible VAT. The case involved a German company that, through its Italian P.E., carried out taxable transactions within the territory of the State. The Agency excluded the possibility of a refund through the procedure provided by Article 38-bis2 of Presidential Decree 633/72, precisely because of the presence of taxable transactions in Italy. The request for a refund through the VAT declaration of the Italian P.E. was also rejected, as the regulation (Article 30, paragraph 2, letter e) of Presidential Decree 633/72) reserves such a possibility for non-residents without a permanent establishment, identified directly or through a tax representative. The issue becomes even more complicated when it is assumed that the parent company may have conducted transactions without involving the P.E. In the past, the Agency had recognized refunds in such cases (query n. 160/2020), but more recent jurisprudence has taken a restrictive stance. The Court of Cassation, with ruling n. 25685/2023, established that the presence of a P.E. in Italy prevents the parent company from accessing the VAT refund, even for transactions carried out independently.
From 2026, there will be an obligation to link POS systems to telematic cash registers: operational procedures have been defined
Starting from January 1, 2026, merchants who use electronic cash registers and payment systems will be required to uniquely connect the two tools. The Italian Tax Office, with provision no. 424470 dated October 31, 2025, has defined the operational procedures to comply with this obligation. The adopted solution, resulting from discussions with trade associations, does not require a physical connection between the devices, but involves using an online service available in the reserved area of the “Invoices and Payments” portal. Merchants will need to access the “Manage Connections” service and associate each POS (or other electronic payment tool) with the corresponding electronic cash register or certified software, already registered. The connection requires the input of the identifying data of the devices and the address of the local unit where they are used. For devices already active as of January 1, 2026, the connection must be made within 45 days from the publication of the online service. For new POS systems, or in case of changes, compliance must occur between the sixth day of the second month following the availability of the device and the last working day of the same month.
IMU assessment: prior contradictory is mandatory
With the ruling no. 995 of October 24, 2025, the Tax Justice Court of Avellino annulled an IMU assessment notice issued for failure to declare, establishing that local authorities must ensure a preventive contradiction with the taxpayer, under penalty of annulment of the act. The decision is based on Article 6-bis of Law 212/2000, introduced by Legislative Decree 219/2023 and strengthened by Law Decree 39/2024, which requires a contradiction for all appealable acts, with the exception of automated or immediately liquidated ones. According to the Court, the IMU assessment does not fall into these latter categories, as it requires a complex evaluation of the tax base. In the case examined, the Municipality had classified the act as “automated,” but the judges pointed out that it was a discretionary reconstruction of the tax assumption, based on properties involved in previous disputes and assessments regarding their instrumental nature to scientific activities. The ruling emphasizes that preventive contradiction is a fundamental procedural guarantee, allowing the taxpayer to actively participate in the proceedings, avoiding errors and injustices. Its omission results in the annulment of the act, without the need to demonstrate concrete harm.
STAY UP TO DATE WITH THE LATEST TAX NEWS. CLICK HERE TO LEARN MORE!