Cross-border services, the VIES database and Intrastat returns

A Turin web agency builds a website for a Paris company and invoices 6,000 € plus 1,320 € of Italian VAT. The client refuses to pay the tax: in France it accounts for that tax itself, under the reverse charge. The agency has to rework the invoice and, while it is at it, discovers that it has never filed an Intrastat return for its services.

Where a service is supplied

For goods the question is where the merchandise travels. Services do not travel, so the law has had to pick a test. Article 7-ter of the VAT decree lays down the general place-of-supply rule for services, and that rule starts by asking who receives the service.

If the customer is a taxable person, the service is supplied in Italy when that customer is established in Italy. If the customer is not a taxable person, the service is supplied in Italy when the supplier, a taxable person, is established in Italy. The test is simple, and on its own it settles most cases.

The practical effect is immediate. Advice given by an Italian consultant to a Madrid company is not supplied in Italy, because the customer is a taxable person established in Spain. The same advice given to a private individual in Madrid is supplied in Italy, because the supplier is Italian and the customer is not a taxable person.

The definition has a detail that matters. An individual counts as a taxable person only for services received while acting in the course of the activity. A Dutch plumber ordering accounting software for his firm is a taxable customer; the same plumber booking a cookery course for himself is not.

There are exceptions to the general rule, for example for services connected with property, passenger transport, restaurant services or some services to consumers. The Intrastat returns refer to them by leaving out services covered by articles 7-quater and 7-quinquies. This module stays with the general rule, which is the one most small businesses meet.

Who pays the tax when the supplier is abroad

Now turn the situation around. A small Italian business buys a service from a supplier established abroad: a software subscription, an advertising campaign, technical consultancy. The customer is a taxable person established in Italy, so under article 7-ter the service is supplied in Italy. What remains is to decide who pays the tax.

Article 17 of the VAT decree answers: obligations on supplies made in Italy by non-residents to taxable persons established in Italy are fulfilled by the buyers or customers. The foreign supplier charges no Italian VAT; the Italian customer accounts for it through the reverse charge.

How that is done depends on where the supplier is established. If it is established in another Member State, the customer completes the invoice received and records it under articles 46 and 47 of Decree-Law 331, exactly as for an intra-community acquisition of goods.

If instead the supplier is established outside the Union, there is no EU invoice to complete. Paragraph 5 of article 21 then requires the customer to issue the invoice itself, as a single copy, or to make sure that a third party issues it on its behalf.

That invoice, which the customer issues under an obligation of its own, carries the note «autofatturazione» required by paragraph 6-ter of article 21. If a third party issues it, responsibility stays with the customer. The accounting result is the same as for a completed invoice: tax owed and, where allowed, tax deducted.

• Service bought from an EU supplier: complete the invoice received and enter it twice
• Service bought from a non-EU supplier: self-billed invoice as a single copy, marked «autofatturazione»
• In both cases: Italian tax at the rate for that service, owed and deducted where the right exists
• General-rule service from an EU supplier: it also goes into the purchases Intrastat return

For a business with full deduction the transaction costs nothing, but it still has to be done. A forgotten self-assessment leaves a gap in the sales ledger, and so in the periodic return and the quarterly report. Self-assessing at the wrong rate produces the same error on both sides and can go unnoticed for a long time.

The notes on the invoice

Back to the side of the business selling a service. When the service is not supplied in Italy, the Italian supplier charges no tax but must still issue an invoice. Paragraph 6-bis of article 21 sets the note to show instead of the tax, optionally citing the EU or Italian provision.

If the customer is a taxable person liable for the tax in another Member State, the note is «inversione contabile», reverse charge. If the transaction is treated as taking place outside the Union, the note is «operazione non soggetta», outside the scope. Two different notes for two different situations, and mixing them up is one of the commonest errors.

The issuing deadline has its own rule too. For services supplied to taxable persons established in another Member State, not taxable in Italy under article 7-ter, the invoice is issued by the 15th of the month after the month in which the service was performed, as paragraph 4 of article 21 provides.

This is exactly where the web agency in the opening story went wrong. Its Paris client was a business: the service was not supplied in Italy, the invoice should have said «inversione contabile» and carried no Italian VAT. The client would have accounted for French tax, and the agency should have reported the service in its Intrastat return.

Joining and staying in the VIES database

None of this works if the Italian VAT number is not included in VIES, the European VAT information exchange system. The Revenue Agency's page is clear: VAT-registered persons must be included in that database in order to carry out intra-community transactions.

The obligation covers everyone who carries on a business, craft or profession in Italy, or sets up a permanent establishment there. Non-residents who are directly identified or who act through a fiscal representative can also ask to be included, with special rules for those coming from outside the Union.

The wish to be included is expressed in the «Operazioni intracomunitarie» box of section I of form AA9, for sole traders and self-employed professionals, or of form AA7, for everyone else. Anyone who did not do so when registering can ask later through the Agency's online services, directly or through an intermediary.

The Agency adds the VAT number to the database as soon as it receives the option. The business can check that it has been included with the online verification service. By the same route it can say at any time that it wants to leave the database, if it no longer plans to trade within the EU.

Staying in the database takes consistency. The position of those included is monitored over time and the Agency runs formal checks on whether recapitulative returns are filed. Anyone who files no return at all for four consecutive quarters is removed, after a notice, with effect from the sixtieth day after the date of that notice.

Removal often hits businesses that asked to be included for a one-off deal and then never traded abroad again. The day they sell to a European customer once more, their number shows as invalid in the system, and the customer may refuse to treat the supply as free of tax.

Intrastat returns: what, when, how often

There are two recapitulative returns, usually called Intrastat. The first covers transactions made with taxable persons established in another Member State: intra-community supplies of goods, and services other than those under the exceptions in articles 7-quater and 7-quinquies.

The second covers transactions received from taxable persons established in another Member State: intra-community acquisitions of goods and services falling under the general rule of article 7-ter. A business that both buys and sells in Europe may therefore file both returns, each on its own schedule.

Frequency is set for each return and for each category of transaction. It is quarterly for those whose transactions in that category, over the previous four quarters, did not exceed a quarterly total set on the Agency's page. Anyone above that threshold files every month.

A business that started less than four quarters ago files quarterly, provided it stayed below the threshold in the quarters already completed. A business entitled to file quarterly may choose monthly filing instead, but that choice covers the whole calendar year: you cannot switch back and forth as you please.

The opposite switch is compulsory. A quarterly filer that crosses the threshold during a quarter must move to monthly filing from the month after the one in which it crossed. For the months of that quarter already gone, it files monthly returns, flagged accordingly.

Returns go to the Customs and Monopolies Agency electronically, by the 25th of the month after the period they cover. Anyone enabled on the Entratel or Fisconline services can use those channels for Intrastat as well. The business can file directly or through an authorised intermediary.

These returns do not duplicate the VAT return. They exist for cross-checking between EU countries: what an Italian business says it sold to a German customer should match the purchases that customer declares in Germany. That is also why failing to file them costs a business its place in VIES.

The caveat of the consolidated code, for services

The Official Gazette shows articles 7-ter, 17 and 21 of the VAT decree, read for this module, as repealed by the consolidated VAT code, which applies from 1 January 2027. The rules explained are those of their last non-empty version, valid for 2026; from 2027 they must be traced in the new articles.

The Agency's pages on VIES and on Intrastat returns are operational pages, updated separately. The Intrastat page was last updated on 4 February 2026. Anyone reading them in a later year should check the threshold and the deadline before trusting the figures given here.