Italy Tax Agency Clarifies Input VAT Recovery on Transaction Costs Related to Merger Leveraged Buy-Out

The Italian Revenue Agency March 2 issued Letter No. 58/2026, clarifying the recovery of input VAT on transaction costs related to a merger leveraged buy-out (MLBO). The taxpayer, a company involved in an MLBO reorganization, received invoices for legal, accounting, tax, due diligence, and financial advisory services. The taxpayer sought clarification on whether it could recover the VAT through supplementary returns or reimbursement. Upon review, the Tax Agency clarified that: 1) supplementary VAT returns weren’t allowed because the failure to deduct the VAT resulted from a conscious and deliberate choice rather than an error or omission; and 2) the taxpayer ...