Press Release: VAT: the European Commission requests that Italy modify its rules regarding the taxable amount for supplies of immovable property

The European Commission formally requested that the Italian Republic modify its legislation according to which VAT on transactions involving immovable property is determined as a percentage of the open market value if the price declared by the parties does not correspond to the market price. Under Community rules on VAT, taxable amount, in principle, includes everything which constitutes consideration obtained by the supplier. In the absence of particular circumstances defined by the VAT Directive, the Italian tax administration cannot automatically calculate VAT for immovable property on the basis of the open market value without any evidence of tax fraud or evasion. The request takes the form of a ‘reasoned opinion’ (second step of the infringement procedure provided for in article 226 of the EC Treaty). If the relevant national legislation is not amended in order to comply with the reasoned opinion, the Commission may decide to refer the matter to the European Court of Justice.