Italy: The OSS regime cannot be used to settle incorrect transactions made before joining the scheme

In accordance with art. 57 quinquies, par. 1 of Implementing Regulation (EU) No. 282/2011, the OSS scheme (resulting from the extension of the MOSS regime previously dedicated to TBE services only) becomes effective from the beginning of the quarter following the registration date on the dedicated portal.

Based on this rule, the Italian Tax Authority stated that any irregularities committed in fiscal years prior the joining the OSS cannot be settled through that regime.

In the event of non-payment of VAT in relation to TBE services to an Italian final consumer, the taxable person established abroad could make the necessary adjustment by (a) a late registration to the MOSS / OSS regime in its Member State of establishment followed by the payment of the VAT due and (b) by paying interest and reduced penalties in Italy, in accordance with the Italian tax settlement procedure. However, if the late registration option under point (a) above is not allowed under rules set forth in the Member State of establishment, the taxable person will have to register for VAT in Italy to pay the VAT.

Key takeaway

New “OSS joiner” will have to carefully verify whether VAT errors occurred before registering under the OSS regime as post adjustment may not always be available.