Italy: Recoverable overhead VAT calculation | KPMG | GLOBAL
Share with your friends

Italy: Recoverable overhead VAT calculation, CJEU judgment

Italy: Recoverable overhead VAT calculation

The Court of Justice of the European Union (CJEU) in December 2016 delivered a judgment in a case concerning whether Italian domestic law concerning the turnover-based calculation to determine recoverable overhead value added tax (VAT) was compatible with EU law. The CJEU found application of the turnover calculation under Italian law is not contrary to the EU VAT Directive. Accordingly, the provision may be applied to VAT on all costs incurred by the company, and not only with respect to VAT on “mixed costs.”


Related content

The case is: Mercedes Benz Italia S.p.A. (C-378/15)

The case referral focused on whether Italian domestic legislation about the turnover-based calculation to determine recoverable overhead VAT was compatible with EU law. According to the Italian law, when the taxpayer performs both taxable and VAT-exempt supplies, this calculation (which works out the proportion of taxable supplies to total by value) would apply to VAT on all the costs incurred by the taxable person (irrespective of the specific use of goods and services).


Read a January 2017 report [PDF 74 KB] prepared by the KPMG member firm in Italy

The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.

Connect with us


Request for proposal