Italian tax court upholds gaming operators’ option for ordinary VAT
Regulation2 min read
Italy’s second-instance tax court rejected the Revenue Agency’s appeal and upheld the cancellation of a payment notice issued to a gaming-machine operator. It ruled that operators can choose ordinary VAT treatment separately from the flat-rate entertainment tax regime, where their tax filings or accounting records demonstrate that choice.
Italy's second-instance tax court rejected an appeal by the Agenzia delle Entrate against the cancellation of a payment notice issued to a gaming-machine operator. The court said gaming-machine operators may elect ordinary VAT treatment without being bound by the flat-rate entertainment tax regime.
The tax agency had argued that article 14-bis of DPR 640/1972 required the flat-rate regime to apply to VAT, excluding the option under article 74, paragraph six, of DPR 633/1972. The judges rejected that argument, citing the distinction between the taxes and businesses' statutory right to choose ordinary VAT. The taxes share a taxable base and collection methods under the special regime, but need not be calculated using the same criteria.
The court cited a June 2026 position of Italy's Court of Cassation that the flat-rate regime covers both taxes but does not remove the taxpayer's right to choose ordinary VAT. The Court of Cassation had said that excluding the option would raise questions about compatibility with European VAT rules, given that the flat-rate system is a departure from ordinary rules.
The election can be demonstrated through a business's conduct and accounting records. In this case, the judges considered the completion of section VO of the VAT return and accounting entries showing a 22% rate decisive. The court said that, once the election and the consistency of the records are established, a taxpayer need not prove that ordinary VAT was applied to every gaming transaction to counter a challenge based on the flat-rate regime being mandatory.
The court ordered the Agenzia delle Entrate to reimburse the second-instance costs and any applicable statutory additions.