Italy Missed VAT Returns Face 120% Penalty

Background

Italian Revenue Agency has adopted a new set of rules for VAT settlement in the event of failure to file an annual tax return. The Director of the Revenue Agency signed, on August 28, 2026, Resolution No. 239129/2026(Resolution), which implements the provisions of Article 54-bis. 1 of the VAT Act. 

The Tax Administration will be able to determine the errors in submitted annual VAT returns, grasping the benefits of digital tax monitoring tools, currently controlled by different tax authorities. Revenue Authority could determine the inaccuracy of the submitted VAT return using the transactional data stored in different databases. 

The Revenue Agency will use the comparison method to evaluate the transactional data concerning the individual taxable person that is under “audit”. The relevant data shall be accessible and automatically compared using the web interface that the Revenue Agency has with the following databases: 

• E-Invoicing storage(sales and purchase invoices)
• Online Payments and Issuance of retail reports 
• Periodic VAT settlements 
• Remittances previously made 

Missed Annual VAT Return 

With the adoption of the Resolution, the Revenue Agency expands its monitoring and reviewing capabilities when it comes to the enforcement of the measures considering erroneous annual VAT returns, lack of payment, or skipping the submission altogether. 

The settlement of the owed VAT could be(from now on) carried out using automated procedures, and adherence to it doesn’t preclude further investigations by the respective tax agency. The Resolution provides a definition of the “omitted VAT settlement”: a declaration submitted completely lacking data relating to active transactions carried out is also considered omitted, when such information is necessary to determine the turnover and liquidate the tax.

As previously mentioned, the Revenue Agency, from now on, will additionally have the option to access the data that is stored in different databases, and to use automated comparison procedures to evaluate the data available in different storage. 

Penalties for Omitted VAT Declaration

For omitted VAT Declaration, under the new framework, the tax agency could add a 120% penalty of the owed tax, on top of the 4% annual interest. The taxable person has an option to reduce the penalty, only if acts promptly, after receiving the notification from the tax agency about the omitted VAT declaration. 

If the payment is made within 60 days from the date of receipt of the report from the tax agency concerning the omitted VAT declaration, the taxable person could reduce the penalty to one third of the original amount. 

In the case when the responsible person decides not to move forward with the payment of the owed tax, complementary with added penalties and interest, as indicated in the notification from the tax agency, the benefit of the reduction of the penalty for timely payment is lost. 

If the sums are not paid within the established terms, the tax, penalty and interest are directly entered in the tax roll as a final payment.

In this case, the benefit of the reduction of the penalty provided for timely payment is lost.

Starting Date of New Rules 

Taking into account the adopted Resolution, and the current rules and regulations that govern the VAT settlement process, the Revenue Agency could potentially have the “horizon of seven years” to examine the transactional data, and the lack of submitted or not submitted annual VAT returns(when needed). 

In practical terms, if the taxable person skipped the submission of the annual VAT return for 2026, which is April 30, 2027, the Revenue Agency can “duly” ask for missed settlement until 31 December of the seventh year following the year in which the declaration should have been submitted, without prejudice to the assessment action.