Average rate
The average rate on purchases exceeds the rate on sales by a set percentage.
VAT numbers · Credits
VAT credit refund
A VAT credit that grows every quarter is cash tied up. You can recover it in two ways: by offsetting it against other taxes or by claiming it as a refund. The right route depends on how much it is worth and how quickly you need it.
01 · The credit
Why a VAT credit builds up
A credit arises when the VAT paid on purchases exceeds the VAT charged on sales. In some businesses this is not a one-off but a structural condition.
- A higher average rate on purchases than on sales: typical of anyone selling goods at a reduced rate.
- Zero-rated transactions: exports and intra-EU supplies generate credit systematically. See invoicing abroad.
- Split payment: if you work for the public administration, you never collect the VAT. See split payment.
- Reverse charge on sales: the same dynamic, because no output VAT arises.
- Significant investment in depreciable assets: the credit is temporary but substantial.
- Starting a business: high initial costs and revenue still low.
The difference between a structural and an occasional credit shapes the strategy: if you build it up every quarter, it pays to make the quarterly refund standard practice; if it comes from a single investment, you can handle it by offsetting or in the annual return.
02 · How to recover it
Offsetting or a refund
The credit is not lost: it gets used. There are two routes, and they are not mutually exclusive.
- Offsetting is quicker but limited by the annual cap and by how much you have to pay.
- A refund has no cap but requires you to meet strictly defined conditions.
- The two routes can be combined: part offset, part refunded.
- If you have overdue tax debts on the rolls above the threshold, you cannot offset until you settle them.
| Offsetting | Refund | |
|---|---|---|
| How it works | The credit reduces other taxes and contributions paid through the F24 (the Italian tax payment form) | The Agenzia delle Entrate (the Italian Revenue Agency) actually pays out the money |
| Timing | Immediate, at the first available deadline | From a few months upwards |
| Limits | Annual cap on horizontal offsetting | No cap, but conditions must be met |
| Visto di conformità (compliance certification by a professional) | Required above a credit threshold | Required above a threshold, unless security is provided |
| When it makes sense | If you have taxes and contributions to offset | If the credit far exceeds what you can offset |
03 · Who can claim it
The conditions for a VAT refund
You cannot claim a refund just because you have a credit: specific conditions are needed, stated in the annual return or in the quarterly claim.
Zero-rated transactions
When they exceed a percentage of turnover: exporters and those selling within the EU.
Depreciable assets
Limited to the VAT paid on the purchase of depreciable assets.
Out-of-scope transactions
Services supplied to foreign parties, above a percentage of turnover.
Non-resident businesses
With their own rules for those directly identified and for fiscal representatives.
Ceasing the business
The credit remaining at closure is claimed as a refund, with no other conditions.
The most overlooked case
The refund when the business closes.
- If you cease trading, you can claim a refund of the remaining credit
- The other conditions are not needed
- It must be stated in the return for the final period
- If you forget it, the credit is lost for good
04 · Don't wait a year
The quarterly VAT refund
It is the most useful tool if your credit is structural, and the least used: it lets you recover the credit without waiting for the annual return.
The TR form
It is filed electronically by the end of the month following the quarter concerned.
The conditions
They are narrower than the annual ones: average rate, zero-rated transactions, depreciable assets, out-of-scope transactions.
The minimum amount
The quarterly credit must exceed a minimum threshold before it can be claimed.
The choice
With the same form you can claim the refund or set the credit aside for offsetting.
The TR form also lets you release the credit for offsetting before the annual return: useful if you have payments to make during the year and do not want to wait. It is a separate function from the refund, and often faster.
05 · The conditions
Visto di conformità and security
Above certain thresholds the refund requires protection for the Treasury: a professional's visto di conformità or a security.
- Below the threshold the refund is claimed with no further formalities.
- Above the threshold you need the visto di conformità and a self-certification on your financial soundness.
- Instead of the visto you can provide security (a surety), at a cost.
- The security is mandatory for businesses regarded as at risk: recently started businesses, those served with tax assessments, those in insolvency proceedings.
- A high ISA score (the synthetic reliability indices) exempts you from the visto up to higher thresholds. See ISA.
- The cost of the visto or of the security should be weighed against the financial benefit of getting the money back early.
06 · How long you wait
Payment times and checks
Timing varies a great deal with the amount, the condition relied on and how regular your position is.
- Refunds of modest amounts with a regular position are the quickest.
- Large amounts go through more thorough checks, with requests for documents.
- The office may ask for clarification: answering promptly and fully shortens the wait.
- Interest accrues on the sums refunded, under the applicable rules.
- The refund can be suspended if you have outstanding tax debts, which are offset by the office.
- How regular your overall position is has the greatest effect on timing.
The most common cause of delay is not the tax office: it is incomplete documentation sent in reply to requests made while the claim is examined. Preparing registers, the relevant purchase invoices and the calculations supporting the condition in advance shortens the wait considerably.
Frequently asked
The questions that keep coming up
I have a VAT credit. Can I simply ask for it back?
Having the credit is not enough: you need one of the conditions set by law (average rate, zero-rated transactions, depreciable assets, out-of-scope transactions, ceasing the business).
Without a qualifying condition you can still use the credit for offsetting or carry it forward to the next year. For modest credits, offsetting is often the quickest route.
What is the quarterly refund?
It lets you claim a refund of the credit built up in a single quarter, without waiting for the annual return. It is filed with the TR form by the end of the month following the quarter.
It is the natural tool if your credit is structural (exporters, those working under split payment or reverse charge) and it stops you tying up cash for a whole year.
Is the visto di conformità always required?
No, only above a threshold of credit claimed as a refund or used for offsetting. Below the threshold no additional formality is needed.
A high ISA score also exempts you from the visto up to higher thresholds: it is one of the concrete benefits of the reward scheme, and worth including in the calculation.
I am closing my partita IVA (Italian VAT number) and have a credit. Do I lose it?
No, as long as you claim it. The credit remaining when the business ceases can be claimed as a refund without the other conditions, by stating it in the return for the final period.
It is, however, a step that is often forgotten in the rush of closing, and a credit that is not claimed is lost. See closing your partita IVA.
Let's talk
The quarterly refund is the tool almost nobody uses
If your credit is structural, you can recover it three times a year instead of waiting for the annual return.