If you have a VAT number in your EU country and you want to sell to individuals (with no VAT number) in Italy, you are required to have a VAT number in Italy.
Back in the days, you were required to set up an entity in Italy or have a fiscal representative located here; this process is costly and develops multiple tax and accounting issues.
The Council Directive 2000/65/EC introduced the direct registration to smooth the process up!
WHO CAN ASK FOR THE DIRECT REGISTRATION
The VAT direct registration in Italy applies to all entities within the EU that have a VAT number in their own country. Furthermore, the direct registration is required only if the entity wants to sell to individuals with no VAT number in ITALY!
HOW DOES IT WORK?
The process is quite simple, the foreign entity has to file the demand on paper and send it to the Tax authority; the whole process usually requires 1 month.
Then, the tax authorities release the Italian VAT code.
If the information included in the form is not sufficient, the tax authority can require integrations and amendments; that's why a local tax practice is often suggested in order to speed the whole process up.
WHAT HAPPENS NEXT?
After the entity has its VAT number, it can operate freely in the Italian market selling to individuals. At this point, the entity has to comply with local VAT rules, filing returns and paying any tax liability due within the required time period. If you need further information regarding the Italian VAT rules, check this post.
WHY IS IT GOOD?
Direct registration involves no Permanent Establishment within the Italian territory, therefore tax authorities cannot claim for income generated in Italy and it is all taxed in the resident country.
If you need any help in direct registration, Accounting Bolla has a successful track of direct registration! We are glad to help!
After moving back to Italy from the United States in 2013, I realized how much an accounting and tax firm was needed to help expats living in Italy to comply with the local tax regulations.