Italy Tax Agency Clarifies VAT Treatment on Issuance of Variation Note for Sales Contract

The Italian Revenue Agency Sept. 20 posted online a letter clarifying the VAT treatment of a variation note issued in a settlement agreement for the supply of goods. The supplier issued the variation note to reduce the taxable amount of a transaction after selling a partially defective supply of goods to a leasing company. The tax agency ruled that the leasing company cannot deduct VAT on the taxable amount of the note, which was reduced mutually without the court’s intervention, because the note cannot be modified after one year from the date of the original transaction. [Italy, Revenue Agency, 09/20/19] ...