Italy's Revenue Agency issued comprehensive guidance on December 16, 2025, detailing the operational procedures for the new cross-border VAT exemption scheme for small and medium enterprises that took effect January 1, 2025, implementing EU Directive 2020/285.
The scheme allows qualifying businesses established in one EU member state to operate VAT-free in other member states, provided they stay below €100,000 annual EU-wide turnover and respect individual country thresholds. Italy sets its national threshold at €85,000 for operations within its territory.
Registration and Compliance
Italian-established businesses seeking to operate under the scheme in other EU states must submit a prior notification to the Revenue Agency, which then coordinates with target member states to verify eligibility. Upon approval, businesses receive an "EX" suffix added to their Italian VAT number within 35 working days.
The guidance establishes quarterly reporting requirements for participating businesses, covering all EU operations regardless of the specific member state. Businesses must report turnover data and notify any changes that might affect their eligibility status.
Turnover Calculations
The circular clarifies that turnover calculations include all taxable supplies, exports, and intra-community supplies but exclude investment goods sales and certain exempt operations like medical services and financial transactions. For multi-currency operations, exchange rates are fixed using European Central Bank rates from January 1 of the relevant year.
Foreign businesses established in other EU member states can similarly operate in Italy under the exemption, subject to Italian Revenue Agency verification and compliance with quarterly reporting obligations.
Context
The new regime represents a significant shift from the previous domestic-only VAT exemptions for small businesses, enabling cross-border operations without the administrative burden of multiple VAT registrations. The implementation aligns with broader EU digitalization efforts and follows the One Stop Shop model used for e-commerce VAT compliance.