The Revenue Agency has recently provided clarifications regarding the possibility for a consolidated company to transfer its quarterly VAT credit to the consolidating company under the tax consolidation regime.
The answer, contained in document no. 180 of 12 September 2024, addresses a specific case concerning a company that operates mainly in the export and intra-Community sales sector.
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Request for transfer of quarterly VAT credit
The applicant company, which adheres to the tax consolidation regime, has formulated a question to the Revenue Agency regarding the possibility of transferring the VAT credit accrued in the first quarter of 2024 to the consolidating company.
This credit was generated mainly through export transactions and intra-Community transfers, which, as is known, are non-taxable transactions for VAT purposes. The company referred to Article 12-sexies of the Growth Decree (Legislative Decree no. 34/2019), which extended the possibility of transfer to infra-annual VAT credits, i.e. those accrued quarterly.
This rule had initially provided for this option only for credits arising from the annual VAT declaration, but was then extended to credits accrued on a quarterly basis.
The company believed that this equation between annual VAT credit and quarterly credit should also apply in the context of tax consolidation, thus allowing the transfer of the credit to the consolidating company to allow its offsetting with the IRES due by the group.
However, the absence of a specific field in the IVA TR model, which would allow this transfer to be indicated, raised operational doubts about how to proceed.
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What is the tax consolidation regime?
The tax consolidation regime is an optional taxation method that allows a group of companies, linked by a control relationship, to determine a single taxable base for the purposes of IRES (Corporate Income Tax).
In essence, the companies that are part of the group consolidate their income, allowing the profits of one company to be offset against the losses of another within the same group. This option can be adopted both domestically and globally, depending on the tax residence of the companies involved.
Tax consolidation offers several advantages, including simplification of tax management and the ability to use tax credits more efficiently within the group.
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The Revenue Agency’s response: limits and conditions for the transfer
The Revenue Agency, in its response, recalled that the rules currently in force regarding the tax consolidation regime provide for the possibility of transferring tax credits to the consolidating company, but within certain limits. In particular, companies participating in the consolidation can transfer tax credits to the consolidating company for an amount that does not exceed the IRES resulting from the consolidated declaration.
Furthermore, the 2022 Budget Law has set a maximum limit for these transfers, equal to two million euros.
The Agency also cited a number of practice documents already issued on the matter, including response no. 191/2019, response no. 133/2021, resolution no. 45/2022 and response no. 543/2022, which helped to better define the criteria for the transfer of credits within the tax consolidation.
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Clarifications on the transfer of quarterly VAT credit
A central point of the Revenue Agency’s response concerns the transfer of quarterly VAT credit. The Agency has specified that the provision cited by the applicant, namely Article 12-sexies of the Growth Decree, refers exclusively to the possibility of transferring intra-annual VAT credits requested for reimbursement.
This means that the transfer is permitted only for those VAT credits that have been expressly requested for reimbursement, and not for all credits resulting from the VAT TR model.
The applicant’s interpretative error lies precisely in this distinction: while the IVA TR model can report both credits requested for reimbursement and credits requested for compensation, only the former can be transferred.
The Agency stressed that this difference is fundamental and that, in this specific case, the applicant company cannot transfer to the consolidating company the quarterly VAT credits generated in the first quarter of 2024, since they have not been requested for reimbursement.
