Italy Tax Agency Clarifies Input VAT Deductions for Services Related to Liquidation

The Italian Revenue Agency Sept. 22 issued Letter No. 251/2025, clarifying input VAT deductions for services related to liquidation. The taxpayer, a company with ongoing liquidation proceedings, received invoices related to the liquidation from attorneys, debt collectors, and other service providers. The taxpayer provided VAT-exempt services with no right to deduction prior to the liquidation proceedings, and sought clarification regarding whether the input VAT paid on the invoices was deductible. Upon review, the Tax Agency found that: 1) the legal services related to managing the taxpayer’s tax disputes constituted dispute resolution services that were preparatory and instrumental to the liquidation ...