Third Sector VAT Extension: Latest Updates

An important Cantieriviceversa conference was held on 11 November for Third Sector workers, which was also attended by representatives of the MEF.

On this occasion it is anticipated that the expected extension for the third sector VAT regime should be imminent and probably included in the Legislative Decree with provisions regarding the third sector, business crisis, sport and VAT approved by the Government on a preliminary basis which should also be definitively approved by the end of the year for subsequent entry into force.

1) Third sector VAT: the MEF confirms the work underway on the extension

During the conference, the news came from MEF Director Adrea Giannone who reported that the extension of the new VAT regime for the third sector should be for ten years and will most likely be included in the legislative decree preliminarily approved in the Council of Ministers on 22 July, which will now have to be definitively approved.

The Legislative Decree has been examined by the parliamentary commissions (government act 295) and it seems that the request for the necessary extension has arrived from the commissions, for the complex matter of VAT for the third sector.

Andrea Giannone also specified that the ministerial offices are working to accommodate the requests of the associations and parliamentary commissions regarding VAT.

We remind you that the Legislative Decree with Government Act n. 295 contains the draft legislative decree containing «provisions regarding the third sector, business crisis, sport and value added tax», implements some principles and directive criteria referred to in articles 3, 7 and 9 of law n. 111 of 2023, «Delegation to the Government for tax reform».
The Government Act consists of 11 articles concerning, with reference to the tax discipline of the third sector:

• the regulation of the transfer of capital goods from commercial to non-commercial activities as a result of the change in the tax classification of the activity carried out (article 1),
• the raising to 85,000 euros of the revenue threshold up to which access to the flat-rate regime is permitted, for the sole purposes of value added tax, for activities carried out by voluntary organizations and social promotion associations (article 2),
• the exemption, for
  voluntary organizations and social promotion associations adhering to the flat-rate regime are subject to the obligation to certify the fees and the exclusion, starting from the tax period following the one in progress on 31 December 2025, from the obligation of tax certification of the sales and services carried out by the same subjects (article 3).

With reference to amateur sports entities, an adjustment is envisaged in the subjective scope of application of the flat-rate regime applicable, for the purposes of income taxes and VAT, to amateur sports entities (Article 4)

Article 5 contains changes to the regulations, for IRES purposes, of contingent assets aimed at updating the cases of reduction of non-taxable debts deriving from the current procedures that can be activated against the debtor in a state of crisis or insolvency.

Article 6 provides for the repeal of the third paragraph of article 19-bis.2 of Presidential Decree no. 633 of 1972, a rule considered redundant as the case is already regulated by the previous paragraphs of the same article.

Article 7 establishes that for non-commercial entities, VAT on purchases, including intra-community ones, and imports of goods and services partly intended for purposes unrelated to the exercise of the economic activity, is deductible exclusively for the portion attributable to this economic activity.

Article 8 updates the Consolidated VAT Act relating to the storage and transmission of data on cross-border purchases by payment service providers

Article 9 extends the VAT non-taxability regime to international transport services rendered to the exporter, to the holder of the VAT regime

transit, to the importer, to the recipient of the goods or to the provider of shipping services, including customs services, even if carried out by intermediaries.

Article 10 repeals an unimplemented provision present in law no. 197 of 2022, relating to the obligation to communicate to the Revenue Agency data relating to sales of movable goods through electronic platforms to transferees who are not VAT payers.

Article 11 comes into force.

News is expected for its definitive approval, probably by the end of the year.