Joint and several liability
Each company is jointly and severally liable with the parent company for the amounts relating to its own position.
Companies · Groups
Group VAT settlement
One group company with a VAT credit and another with a VAT debt behave like strangers: the first waits for a refund, the second pays. The group settlement brings them together, and the credit is used straight away.
01 · How it works
What group VAT settlement lets you do
The procedure lets you offset, within the group, the VAT credits and debts of the individual companies, settling and paying a single position.
- Each company keeps its own VAT position, with its own partita IVA (Italian VAT number), registers and invoicing.
- The periodic settlements flow into a single group settlement.
- There is a single payment, made by the parent company.
- One company's credit immediately reduces another's debt.
- Intra-group transactions remain relevant for VAT: they are invoiced as normal.
- It is different from the VAT group (Gruppo IVA), which instead creates a single taxable person.
The difference from the VAT group is substantial: the group settlement keeps the companies as separate taxable persons and only offsets their settlements; the VAT group merges them into a single taxable person, with one partita IVA and no relevance for internal transactions. They are two different arrangements with very different effects.
02 · Who can use it
The requirements for access
You need a qualifying control relationship, which must exist from a specific date and continue for the whole period.
- The parent company must hold a stake above the set threshold in its subsidiaries.
- Control must exist from a date set by law, before the year in which the option is exercised.
- The requirement must be maintained for the whole duration of the procedure.
- The option is notified with the VAT return or the designated form, within the deadlines.
- The scope need not include all the subsidiaries: the choice lies with the parent company.
- Companies that join or leave during the year follow specific rules.
Choosing the scope
Not every subsidiary has to join.
- You include the companies whose position is useful for offsetting
- You leave out those with marginal or problematic positions
- Joining brings joint and several liability: it must be assessed for each company
- The scope can be changed, under the rules provided
03 · How it runs
What the procedure requires
Running it requires monthly or quarterly coordination between the companies and the parent company.
- The periodic settlement returns follow rules of their own under the group procedure.
- A summary register of the transfers must be kept.
- The annual VAT return is filed by each company, with the group schedule prepared by the parent company.
- The internal financial arrangements must be settled: a company that transfers a credit is entitled to be paid for it.
Individual settlements
Each company works out its own periodic VAT position under the ordinary rules.
The transfer
The individual balances, whether credit or debit, are transferred to the parent company and recorded in the summary registers.
The group settlement
The parent company adds up the positions and works out the single balance to pay or the group credit.
Payment
A single payment by the parent company, with the F24 (the Italian tax payment form) and dedicated tax codes.
04 · The constraints
Liability and security
The cash flow benefit is balanced by a liability regime that involves all the participating companies.
Security
In certain situations the procedure requires security to be provided for the credits offset.
Exemptions
There are exemptions from providing security for taxpayers that meet requirements of reliability and financial strength.
Internal agreements
They set how transferred credits are paid for and how costs are shared between the companies.
Leaving
A company that leaves remains liable for the periods in which it took part.
Ending
When the procedure stops, the individual positions are restored.
05 · The calculation
When it is worth it
The benefit is purely financial: it does not reduce the tax, it brings it forward or pushes it back.
| The group's situation | Assessment |
|---|---|
| One exporting company in credit and one in debit | Immediate and recurring benefit |
| One company under split payment and others trading normally | The structural credit is absorbed straight away |
| Companies in an investment phase with a temporary credit | Benefit limited to the investment period |
| All companies in debit | No benefit: only running costs |
| Group with companies at risk | Joint and several liability must be weighed carefully |
| Group whose accounts are kept by different people | Coordination is the real cost of the procedure |
The comparison must be made with the real alternative: the quarterly refund. If the company in credit can recover it within a few months with the TR form (quarterly VAT refund request), the benefit of the group settlement shrinks to the months saved, and has to be weighed against the coordination costs.
06 · The other arrangement
The VAT group, which is something else
It is worth knowing about because it is often confused with group VAT settlement, and in some situations it is the more suitable tool.
- The VAT group creates a single taxable person, with one partita IVA.
- Internal transactions within the group become irrelevant for VAT: they are not invoiced.
- It requires financial, economic and organisational links between the participants.
- The option is binding for a minimum period and covers all the companies that meet the requirements.
- It is particularly useful where there are many intra-group transactions and limits on VAT deduction.
- It is more complex to run: it is a structural choice, not a cash flow optimisation.
The VAT group suits above all groups with a limited deduction pro rata and many internal transactions: by making those transactions irrelevant, it removes the non-deductible VAT that would otherwise arise at every step. Outside that case, the group settlement is usually enough.
Frequently asked
The questions that keep coming up
Are group VAT settlement and the VAT group the same thing?
No. The group settlement keeps the companies as separate taxable persons, with their own partita IVA and invoicing, and only offsets the periodic settlements.
The VAT group instead creates a single taxable person with one partita IVA, making internal transactions irrelevant. They are two different arrangements, with very different requirements and consequences.
Do invoices between group companies change?
Under the group settlement, no: intra-group transactions remain fully relevant for VAT and are invoiced as normal, with VAT charged.
In the VAT group, on the other hand, internal transactions become irrelevant and are not invoiced for VAT purposes. It is one of the most visible practical differences between the two.
Do I have to include all the subsidiaries?
Under the group settlement, no: the parent company chooses the scope, including the companies whose position is useful for offsetting.
In the VAT group, by contrast, the principle is "all in or none": every company that meets the requirements must take part.
Is it better than the quarterly refund?
It depends on how the group is structured. If the company in credit can recover it with the TR form within a few months, the advantage of the group settlement shrinks to those months gained.
It clearly pays when the credit is structural and recurring and there is a steady debt in the group to absorb it: then offsetting is immediate and continuous, with no claims and no waiting.
Let's talk
The benefit is in cash flow, and you see it from the first month
If in your group one company builds up a structural credit while another pays every month, it is worth assessing before the deadline for the option.