Starting from January 1, 2025, a new cross-border franchise VAT regime will come into effect, allowing small and medium-sized enterprises (SMEs) to operate without additional taxes in multiple EU member states.
This article discusses the key changes introduced by the legislative decree approved by the Italian government, implementing EU directives on VAT simplification for SMEs and taxation of streaming services.
From January 1, 2025, Italy will adopt a new cross-border franchise VAT regime for SMEs, following the approval of a legislative decree by the Council of Ministers.
This regime will eliminate VAT obligations for SMEs established in Italy or another EU member state, except for the certification of revenues and document retention.
SMEs under this regime can issue simplified invoices without the previous limits set by the law.
Additionally, SMEs under the franchise regime will not be able to claim VAT deductions for transactions related to the franchise.
This regime can be reciprocally applied by Italy towards SMEs in other EU member states and vice versa.
SMEs established in Italy can request the franchise regime in other EU member states under certain conditions, including notifying the tax authorities in advance and meeting specific turnover thresholds.
The Italian SMEs granted the franchise regime in other member states will be identified with their VAT number followed by the suffix "EX".
Similar provisions apply for non-established entities seeking the franchise regime in Italy.