Split payment is the new VAT payment method introduced by the Italian financial act of 2015. This method applies in relations between private companies and public administration. This type of payment was used to reduce VAT evasion by ensuring that the public entity paid with invoice had to withhold VAT and then deposit it directly to the Treasury. However, with the Decree Law 50/2017, since 1 July this measure will be extended to companies controlled directly by the Presidency of the Council of Ministers and by Ministries and to quoted companies included in the FTSE MIB, “so both Rai and Mediaset”, as APT President Giancarlo Leone alarmingly highlighted.
Leone said: “Many of my associates are wondering whether this is the right time to consult the European Court of Justice. This rule threatens to destroy the Italian audiovisual industry. The problem is that investments will focus on countries without our same restrictions”. TV producers are worried about the insert of the public broadcaster among these beneficiaries: the national public broadcasting service started sending letters to independent producers. According to Leone, “we are facing a paradoxical situation: the State gives with one hand and takes away”. This refers to the mechanism of tax credit which is valid for the audiovisual field too.
Producers can currently use accumulated tax credits to the achievement of audiovisual works to offset VAT debts which have been created after issuing invoices for production contracts signed by Rai. Because of split payment, the use of tax credit is basically undermined (its rates have been increased to up to 30% on the basis of some characteristics) to offset debts; therefore, a sort of self-financing is missing. Moreover, activities of producers are structurally VAT debt because they significantly use the workforce not subject to VAT.
Leone ends by saying: “We hope that the Government will intervene properly in the implementation of the Ministry of Economics and Finances (MEF) which has to be issued. Entities like Rai and Mediaset must be excluded. Inaction would be a bad signal, especially now that MiBACT with the Franceschini Law and the implementing decrees on tax credit aims to create value and make Italian film and TV series production companies more competitive and strong”.
