On 15 May 2026, FiscoOggi, the official online publication of the Italian Revenue Agency (Agenzia delle Entrate), reported on Order No. 10259 of 20 April 2026 issued by the Italian Supreme Court (Corte di Cassazione).
According to the report by Romina Morrone, the Court held that a mobile-phone supplier operating under the reverse-charge VAT regime cannot reduce its VAT position through a downward adjustment when it later reimburses part of the purchase price to end consumers through a cashback promotion.
The dispute concerned promotional campaigns conducted during the 2015 and 2016 tax years. A mobile-phone company sold devices to retailers under Italy’s reverse-charge mechanism, meaning the retailers—not the supplier—became responsible for accounting for VAT on the transactions. The supplier subsequently offered cashback payments directly to final consumers and argued that these rebates reduced the taxable amount of the original sales, entitling it to recover VAT through a variation note under Article 26 of Presidential Decree No. 633/1972.
The Italian Revenue Agency rejected the claim, arguing that the supplier had never charged or paid VAT on the original transactions because the reverse-charge system transferred the tax obligation to the retailers. Lower courts agreed, and the company appealed to the Supreme Court.
The Supreme Court dismissed the appeal. As summarized by FiscoOggi, the Court ruled that the reverse-charge mechanism fundamentally alters the tax relationship by making the retailer, rather than the supplier, the VAT debtor. Consequently, cashback payments made by the supplier to final consumers affect only the economic price ultimately borne by consumers and do not alter the upstream VAT relationship between supplier and retailer.
The Court further held that the adjustment mechanism under Article 26 applies only to a taxable person who previously charged and paid the VAT being adjusted. Since the supplier never paid VAT on the original reverse-charge transactions, it could not issue a decreasing variation note or claim a corresponding refund.
According to the report, the Court also rejected arguments based on the principle of VAT neutrality, concluding that neutrality is preserved because the adjustment mechanism remains available only to the person legally liable for VAT on the original taxable transaction.
