Italy can continue to provide for the mechanism of the split payment until 30 June 2026, thanks to a derogation granted by the EU Council in 2023. But what is it?
With the split payment, the VAT is not collected directly by the supplier who performs the transfer of goods or the provision of services, but paid directly by the person who receives the invoice, typically a public administration body.
From July 1, 2025, however, companies listed on the stock exchange can no longer take advantage of this mechanism.
What is the split payment
Split payment (splitting of payments) is a particular mechanism of application of VAT, governed by art. 17-ter of Presidential Decree no. 633/72, introduced by law no. 190/2014 (art. 1, paragraph 629, letter b).
In this system, the VAT indicated on the invoice by the supplier is not collected by the latter, but paid directly to the eratory by the customer, when the latter belongs to certain categories, such as the Public Administration.
The split payment was introduced for:
This mechanism derogates from the ordinary VAT system and applies only in specific cases.
Who interests
The regime applies to the transfers of goods and services subject to VAT, for which the issue of invoice is provided (excluding those subject to Reverse Charge), carried out towards:
The operations concerned
The split payment is applied to all operations subject to VAT (not in Reverse Charge), issued by invoice, which consist of:
carried out towards obliged subjects.
