VAT declaration

VAT refund credits, how they work and how the tax dispute occurs

With regard to VAT credits, specific inconsistencies may occur and the taxman, consequently, may proceed with the dispute and request for a refund.
At this juncture the taxpayer must comply with certain specifications otherwise he will be forced to reimburse the VAT due.
What are VAT refund credits? Before understanding how the tax dispute works, we specify that VAT refund credits refer to a situation in which a company or taxpayer has paid more VAT than what it owed, and therefore has the right to request a refund of excess sums paid to the Revenue Agency.
These VAT credits can arise from a number of circumstances, including: Purchases of goods and services at a lower VAT rate than that which applies to the business's sales, Situations where a business is entitled to tax deductions or credits VAT following special transactions, such as investments in specific assets or tax reductions, VAT credit can also arise from intra-community or international transactions involving VAT, such as purchases or sales within the European Union.
We remind you that the refund request in question can be presented through: The annual VAT return, The quarterly application, therefore the TR VAT form.
The application can be submitted by the taxpayer or through an intermediary who is authorized to proceed with the procedure.
Furthermore, the credit must be no less than 2,582.28 euros.
The tax legislation presents a series of issues related to the sanctioning of undue or non-existent VAT credits.
The foreseen repentance situations also include the management of VAT credits used improperly: When the amount used exceeds what was declared, When the credit is used in violation of the rules that limit its use.
The tax dispute The credit Non-existent VAT requires that the conditions justifying it are completely or partially missing and its non-existence cannot be verified through checks pursuant to the relevant tax regulations.
In other words, we talk about a non-existent VAT credit when a taxpayer subject to VAT, such as a company, reports a VAT credit in its declaration that has no real basis, i.e.
it is not supported by transactions actually carried out.
This is the case of registration errors, the issuing of false invoices or other similar irregularities.
The direct consequence of a non-existent VAT credit is that it cannot be used for compensation in tax payments nor requested as a refund.
The law provides for sanctions for those who improperly or fraudulently use VAT credits, including non-existent ones, in order to guarantee the integrity of the tax system.
The VAT credit not due, however, provides a real basis, therefore the operations have been carried out but the person requesting and receiving it is not in compliance with the regulatory provisions.
The procedure With regard to the procedure, the taxman issues a denial with respect to the taxpayer's request for reimbursement of a VAT credit.
This happens after having made the necessary checks.
In this situation the financial administration disputes the request for VAT compensation, this applies even if the deadlines have expired.
The joint sections also intervened on the issue with sentence no.
21766/2021: «With regard to reimbursement of the deductible VAT surplus, the Financial Administration can dispute the credit shown by the taxpayer in the declaration, which does not derive from the underestimation of the 'tax due, even if the deadlines for the exercise of its power of assessment or for the correction of the taxable amount and the tax due have expired, without having adopted any measure'.
It has been defined that the administration which has lost its powers of assessment and rectification cannot claim a higher tax than that paid in the declaration.
On the other hand, it is possible not to respect the time limits imposed if there is a need to request a greater tax debt from the taxpayer than what was declared.
The taxman therefore has the possibility of contesting a credit already present in the declaration and requested by the taxpayer.

Author: Hermes A.I.

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