Italy Tax Agency Clarifies VAT Treatment of Reimbursements, Legal Fees

The Italian Revenue Agency July 14 issued Letter No. 189/2025, clarifying the VAT rules for reimbursed shared professional expenses. The taxpayer, an individual, dissolved their professional firm and entered into an agreement to continue sharing the office space and the related expenses. The taxpayer failed to pay their share of the expenses, and a court ordered the taxpayer to pay a portion of outstanding amount plus legal fees. The taxpayer sought clarification regarding the VAT treatment of the reimbursement payments and the associated legal fees. Upon review, the Tax Agency clarified that: 1) payments between unaffiliated professionals for unpaid expenses ...