Split payment goodbye, what changes for the companies involved

Starting from July 1st 2025, some new features regarding split payment have been introduced. Only companies listed in the Ftse Mib index are involved, for which VAT will return to the invoices issued by suppliers. But not only that: they will have to comply with a series of new requirements and new sanctions.

The new rules regarding split payment are essentially a consequence of the expiration of the European authorization , which determined the return to ordinary VAT for companies listed on the most important list of the Italian Stock Exchange. The implications have a direct impact on relationships with suppliers.

Split payment regulations in force until June 30

But let's see in detail how the split payment mechanism works.

Introduced through article 17-ter of Presidential Decree no. 633/1972 , since 1 January 2015 it has been one of the most important tools for combating VAT evasion .

Thanks to this system, the transferee/client is not obliged to pay VAT to the supplier . He must withhold it and then pay it to the Treasury . In this way, the risk of non-payment of the tax is avoided.

Who can join the split payment?

There are several entities that can currently access the split payment tool.

These include:

• national, regional and local economic public bodies;
• foundations which are owned by public administrations for at least 70% of the endowment fund;
• companies that are controlled by the Presidency of the Council and by the Ministries;
• companies that are directly or indirectly controlled by public administrations;
• companies that are at least 70% owned by public bodies.

Until June 30, 2025, this list also included companies listed in the Ftse Mib index .

The split payment finds its legal basis in the authorisation granted by the Council of the European Union, which was originally granted through Decision COM(2015) 289 , extended on several occasions.

Split payment
📌 What is split payment?	The VAT not collected by the seller is paid directly to the State by the customer (PA, controlled or listed companies), up to now
🔄 Regime in force until 30 June 2025	Applied to Public Administrations Companies controlled by PA FTSE MIB listed companies
❌ New from 1st July 2025	FTSE MIB listed companies are excluded from the mechanism Invoices issued from this date follow the ordinary VAT regime
🕒 Effective Date	The date of issue of the electronic invoice counts If the SdI receives the invoice by 30 June, split payment applies From 1st July onwards, ordinary VAT applies even if the customer is a listed company
🏷️ Technical requirements	Suppliers no longer need to indicate the split payment code “S” They must issue an invoice with debit VAT and pay it according to the normal regime
⚠️ Errors and corrections	Incorrect invoice under split payment must be reversed and redone In case of failure to correct, the client must report it to the Revenue Agency within 90 days or risks sanctions
📈 Limits and regulatory extension	Italy may maintain split payment until June 30, 2026, but with a reduced perimeter (excluding listed companies)

What has changed from 1 July 2025

As of 1 July 2025, the European authorisation for listed companies will expire.

This has led to a substantial change in the treatment of VAT transactions. In other words, all sales of goods and services that are made to companies that are included in the Ftse Mib index must be invoiced under the ordinary VAT regime .

Very pragmatically, this means that suppliers are obliged to settle and pay the VAT connected to these operations. The companies involved, at this point, have the possibility to deduct the tax without having to proceed with the obligations connected to the double registration that have been directly provided for by the split regime .

The introduction of the new rules does not require regulatory intervention at a national level: Article 17-ter, paragraph 1-ter of the VAT Decree has expressly provided that the provisions on split payment may be applied until the derogation provided by the European Union expires.

The impact on business management

It is important to underline that this change involves only companies that are listed on the Ftse Mib index. Nothing changes for other entities that use split payment, except for subsequent provisions that will come directly from the EU.

The innovation will also have an immediate impact on the administrative and financial management involving suppliers.

If until 30 June 2025 VAT was paid to the Treasury directly by the client, it will now have to be paid in advance by the supplier .

At a later stage it will have to be recovered through the various periodic liquidations . The change determines a greater commitment of cash by the subjects involved, who will have to reorganize the various corporate financial flows.

The risk of billing errors

The new rules on split payment bring with them many pitfalls when it comes to correct invoicing .

It will be up to suppliers to verify which VAT regime should be applied at the time the transaction is carried out. We remind you that the general rule is that the date on which the transaction is carried out is the relevant date, not the date on which the invoice is issued.

Let's try to clarify the concept with a practical example. A company has signed a service contract, which provides that the invoice is issued by the 5th day of the month following the month in which the service is performed.

This means that for services provided in June, the invoice must be issued on July 5, 2025.

When the situation just described occurs, the split-off regime should not be applied, because the operation entered the ordinary regime at the beginning of July.

This means that any automated IT invoicing systems require immediate updating : this way, the issuing of an incorrect invoice is avoided.

How to manage reverse charge transactions

Some transactions continue to remain outside the split regime even today. For invoices subject to reverse charge, the normal rules set forth in the former article 17, paragraph 6, of Presidential Decree no. 633/1972 must continue to apply.

Confirm the rules for the following documents:

• invoices from professionals that are subject to withholding tax;
• operations that must be carried out under the single-phase regime special regimes envisaged for travel agencies and entertainment activities.

In any case, it is important to remember that when a listed company receives an invoice issued under the split payment regime, it can no longer replace the supplier for the payment of VAT.

It is necessary to ask the supplier to issue a credit variation note pursuant to former article 26 of Presidential Decree no. 633/1972 . The company is no longer entitled to operate the VAT deduction.

Who risks the sanction for the split regime

In the event that the split payment regime is applied after 1 July 2025, it exposes the subjects involved to potential sanctions . VAT and the related sanction system do not provide for benevolent interpretations when special regimes are applied.

Issuing invoices using the split-rate system to companies listed on the Ftse Mib index after 30 June 2025 is, to all intents and purposes, a violation of invoicing obligations, which may result in the application of the sanctions provided for by Article 6 of Legislative Decree no. 471/1997 .

Monetarily speaking, the penalty is equal to 70% of the tax , which can be reduced in the case of a spontaneous payment with the voluntary disclosure.