Italy blocks retroactive VAT penalty discounts and ends audit‑period shortcut for flat‑rate taxpayers

The Court of Tax Justice in Salerno ruled that the recent reform of Italy’s VAT penalty regime (Legislative Decree No. 87/2024) does not apply retroactively. Discounts on fines for VAT frauds committed before 1 September 2024 are denied, a measure aimed at safeguarding public revenues.

At the same time, the Omnibus corrective decree removes the one‑year reduction in audit periods for taxpayers under the flat‑rate (forfettario) scheme. From the 2026 tax year the tax authority will have the standard five‑year window to conduct checks, ending the earlier incentive that rewarded voluntary electronic invoicing. The decree, approved in a preliminary cabinet meeting on 10 June, still awaits parliamentary and final ministerial approval.