The Commission of the European Communities has presented a proposal for  a Council Decision authorising the Italian Republic to apply a measure derogating from Article 285 of Council Directive 2006/112/EC on the common system of value added tax (COM(2008) 404 final)

With this proposal, Italy is will be authorised to exempt from VAT taxable persons whose annual turnover is no higher than EUR 30,000. This scheme is optional for taxable persons. Italy will be able to apply it until 31 December 2010 at the latest or a new Decision enter into force with rules establishing a common annual turnover threshold below.

The scheme would be optional for taxable persons, and Italy does not expect all eligible enterprises to make use of it, as businesses who predominantly sell to other taxable persons may prefer to operate within the normal VAT arrangements. Therefore Italy calculates that out of around 930,000 eligible businesses, approximately 710,000 would make use of the simplification measure.
The scheme would have a negligible impact on the total amount of tax revenue. Italy estimates a revenue reduction of some 0.15% in the first year of implementation, rising to around 0.25% in the following two years.
Italy would also like to have the possibility to increase the ceiling in order to maintain the value of the exemption in real terms.

Authorisation context

Chapter 1 of Title XII of the VAT Directive allows for the possibility for Member States to apply special schemes for small enterprises, including the possibility of exempting taxable persons below a certain annual turnover. This exemption implies that a taxable person does not have to charge VAT on his supplies and, consequently, he can not deduct the VAT on his inputs.