But being a freelancer always requires doing the right thing, knowing how to hold on to clients who could leave at any moment. Taxes, however, are the ones who never leave. And this is the point: very often, those who choose to stop being freelancers don’t do so much for financial reasons—which do exist: unpaid clients, oppressive tax deadlines… but rather out of an awareness of their own inadequacy in managing the highly complex and nuanced world of freelance work.
Many are unable to overcome obstacles, to advertise effectively, and are not flexible enough to address the enormous and numerous tax issues in a short time. These are all very valid and respectable reasons for deciding to close their VAT number and, consequently, their lives as freelancers.
In this guide, we aim to help those who wish to close their VAT number by detailing all the steps required to complete the process correctly and without the risk of incurring tax penalties.
Fill out and submit the form
A professional or entrepreneur wishing to close their VAT number is required to submit form AA9/12 to the Revenue Agency, a form for data change or business transfer for VAT purposes reserved for natural persons. This document must be submitted no later than 30 days after the cessation or change of business .
It’s important to fill out the form carefully, as it requires your business code and VAT closure date. Following the instructions always included with the form , the transfer of your business is declared by checking box 3 of section A. You must include your VAT number and the date your business ceased trading.
To close the VAT number, the Agency form must be submitted in the following ways:
- Taxpayers required to register with the Company Register must submit it via a Single Communication either electronically or electronically . ComUnica is valid for fulfilling all administrative requirements required upon registration with the Company Register and is required for social security, welfare, and tax purposes, as well as for obtaining a tax code and VAT number.
- Taxpayers not required to register with the Company Register must submit the form either in duplicate at any Revenue Agency office (they may also send a representative) regardless of the taxpayer’s domicile; or by registered mail, attaching a photocopy of the declarant’s identification document (ID card or passport), which must be sent to any Revenue Agency office, regardless of the taxpayer’s tax domicile. The return is considered “submitted” on the day it is mailed, not the day it arrives. The third option is electronic filing: in this case, it is submitted either by the taxpayer themselves or by entities designated for electronic filing. Returns are considered “submitted” on the day the Revenue Agency has received all the data.
The ATECO code
The ATECO code is the numeric code that identifies the activity carried out by the taxpayer as a self-employed professional. When closing the VAT number, it is essential to indicate the activity code that was open throughout the duration of the self-employed activity: this, and no other, method can be used to declare the activity concluded.
If the taxpayer doesn’t know the activity code they opened, they can check it by accessing their Tax File (Cassetto Fiscale ), or their personal account on the Revenue Agency’s website. The File contains all relevant tax information about the individual, including their activity code.
Costs and the right time to close your VAT number
Another aspect to consider, and one that’s often overlooked (and a source of questions and concerns), is the cost of closing a VAT number. In short, closing a VAT number generally doesn’t cost anything, and only applies if you choose to hire a consultant to complete the process (therefore, these are indirect costs, ie, the costs associated with their advice).
Only when all services related to the work activity have been collected can the VAT number be closed. It goes without saying that all amounts still to be collected must be received while the VAT number is still active in order to be invoiced.
Verify VAT number closure
After completing all the steps for closing your VAT number, you can check its progress and completion through the Revenue Agency website. This service is available to taxpayers to verify the validity of their VAT number and to obtain other information found in the Tax Registry (including: business status, company name, and owner’s personal details).
Here are all the useful links:
Website to check your tax code
When deciding to close their VAT number, the self-employed worker must also take into account all the obligations related to each contribution aspect . Those enrolled in independent pension funds must notify their relevant fund of the cessation of activity. This is a necessary step that will allow the individual to avoid having to continue paying the minimum contributions.
Those enrolled in the INPS separate management system do not need to follow any special procedures. Payments to the INPS separate management system are made in line with tax payments resulting from the tax return. Closing the VAT number automatically eliminates the requirement to complete section RR of the Personal Income Tax (RDI) form. It’s important to note that enrollment in the separate management system remains open should the self-employed professional decide to reopen their VAT number.
VAT number and employee contract
Frequent concerns arise regarding closing a VAT number for those intending to accept an employment contract. It’s important to be clear that it’s not illegal to have an open VAT number and simultaneously have an employment contract.
It’s important, however, that no conflicts of interest arise . If the freelance activity is the same as the VAT-registered activity, then conflicts of interest would arise, which must be avoided from the outset. However, there are no limitations if the freelance activity and the employee work are in two different sectors.
For example, a person with a secretary contract can open a VAT number to carry out web design work, and so on. However, remember to always consult your accountant , as the tax and social security aspects associated with a dual activity must be carefully managed to avoid both missed payments and excessive payments.
VAT office closure after three years of inactivity
Another important thing to know is that the Revenue Agency defaults to closing VAT numbers for individuals who, based on the data held by the Agency, have not engaged in any business activity (artistic or professional) in the previous three years.
This is established by the directorial provision of December 3, 2019, pursuant to which Article 35, paragraph 15-quinquies of Presidential Decree 633/72 introduced by Bill 175 of 2014 and amended by Bill 193 of 2016 is implemented, which provides for the closure of VAT numbers after three years of inactivity.
The procedure is as follows: the Revenue Agency sends the entity identified as potentially inactive a preliminary notification regarding the automatic closure of its VAT number (a registered letter with return receipt). The recipient has the option, within 60 days of receiving the letter, to contact a local Revenue Agency office for clarification regarding their status as an active entity for VAT purposes.
Are there penalties for failing to notify VAT closure?
According to the provisions of Bill 193 of 2016 – the same bill that abolished the 8120 tax code previously used to pay fines using the F24 form – there are no longer penalties for failing to notify VAT closure.
Before this decree, those who failed to communicate the closure of their VAT number could be fined between €516 and €2,000 (fine reduced to €167 if paid within 30 days of the Revenue Agency’s notice).
