When a company wants to trade with other European countries without charging VAT on invoices, it must be registered in the VIES system. Until recently, this registration was almost automatic. Today, it is not anymore.
For many companies, especially non-EU businesses, VIES registration has become a step-by-step process, and one of the most important steps is providing a VIES guarantee bond.
What Is VIES and Why It Really Matters
VIES stands for VAT Information Exchange System. It is a European database that lists VAT numbers authorized to carry out intra-EU transactions, meaning sales and purchases between EU countries without VAT.
If a company is not registered in VIES, it cannot:
- issue VAT-exempt invoices to EU customers
- receive proper intra-EU invoices
- benefit from VAT exemption
In simple terms, without VIES, you are effectively excluded from the European market.
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Why a Guarantee Bond Is Required Today
In recent years, Italian tax authorities identified a significant number of VAT fraud cases involving non-European companies operating in Italy through a fiscal representative. These companies carried out transactions, failed to pay VAT, and then disappeared.
The legislator’s response was clear and strict.
If you are not based in the EU or EEA and want to enter the VIES system, you must first prove your financial reliability.
How? By providing a guarantee bond of 50,000 euros.
This guarantee protects the Italian tax authorities. If something goes wrong, the tax office has immediate financial coverage.
Who Is Required to Provide the VIES Guarantee
The rule is very specific.
The guarantee bond is mandatory for:
- non-EU or non-EEA companies
- that do not have a permanent establishment in the EU
- that operate in Italy through a fiscal representative
- that intend to carry out intra-EU transactions
- that want to continue issuing VAT-exempt invoices
This includes U.S., UK post-Brexit, Chinese, Turkish, Swiss companies, and all businesses established outside the EU and EEA.
If your company fits this profile, the VIES guarantee is not optional. It is mandatory.
The Role of the Fiscal Representative
The fiscal representative is the Italian individual or company that acts as an intermediary between the foreign business and the Italian tax authorities.
The fiscal representative:
- manages the Italian VAT number
- handles VAT compliance
- submits the VIES registration
- formally deposits the guarantee bond
The guarantee does not protect the fiscal representative. It protects the Italian tax authorities against potential VAT liabilities of the foreign company.
Amount and Duration of the VIES Guarantee
There is no room for negotiation.
The minimum amount is 50,000 euros.
It cannot be reduced.
It cannot be negotiated.
It cannot be linked to turnover.
The minimum duration is 36 months, meaning three full years.
If the guarantee is issued for a shorter period, it is rejected. If the amount is lower, it is not accepted.
How Much Does a 50,000 Euro VIES Guarantee Really Cost?
This is the most common and legitimate question.
The cost is not 50,000 euros. That amount is the guaranteed sum, not the price.
A VIES insurance guarantee bond usually involves
an annual premium based on the company’s risk profile
typically between 1.5% and 4% of the guaranteed amount
In practical terms:
the annual cost is usually a few hundred to a few thousand euros
the total cost over three years is the sum of the annual premiums
Other important aspects must be clarified.
Is a cash deposit required?
It depends on the company’s profile.
In many cases, no cash collateral is required.
In some cases, a partial deposit may be requested, always evaluated case by case.
Best when you have an Italian co-obligor and want the lowest cost.
- Your fiscal representative, Italian director, or an Italian company is willing to act as co-obligor.
- You want to avoid blocking €50,000 of capital in a bank deposit or policy.
- You prefer a fixed, all-inclusive premium for the full 36-month period.
Avoid this option if:
- You do not have any Italian person or company willing to act as co-obligor.
- Your group policy does not allow personal or corporate guarantees in Italy.
- You prefer to provide collateral (cash or a policy) instead of using a co-obligor.
Best when you do not want to use a co-obligor and can block €50,000 in cash.
- Your fiscal representative or directors are not willing to act as co-obligor.
- You can block €50,000 in a dedicated cash deposit for the duration of the guarantee.
- You want a classic, straightforward bank-issued guarantee fully accepted by Italian Tax Offices.
Avoid this option if:
- You cannot freeze €50,000 of cash for at least 36 months.
- Keeping liquidity available is more important to you than avoiding a co-obligor.
- You prefer to use a life-insurance-based collateral structure instead of a direct cash deposit.
Best when you want to stay VIES-compliant without freezing €50,000 for three years.
- You want to avoid cash collateral and do not want to freeze €50,000.
- Your company has a clean VAT history with proper F24 payments.
- You need a fast, sustainable solution accepted by the Italian Tax Authority.
Avoid this option if:
- Your company has less than 24 months of history with a Fiscal Representative.
- You cannot provide VAT/F24 compliance documentation.
- You need a guarantee issued outside the shared insurance agreement.
Best when you have no co-obligor but do not want to open an Italian bank account.
- You do not have any Italian co-obligor available.
- Your Italian fiscal representative is willing to handle the funds and subscribe the life insurance policy.
- You prefer to use a pledged life insurance policy as collateral instead of a bank cash deposit.
Avoid this option if:
- You are not comfortable transferring €50,000 to your Italian fiscal representative to fund the policy.
- You cannot immobilise €50,000 for the full duration of the guarantee.
- Your fiscal representative cannot or does not want to manage a life insurance policy on your behalf.
Are there hidden fees?
No, if the process is handled correctly.
The cost consists of the premium and, in some cases, a clearly disclosed underwriting fee.
Can the guaranteed amount be reduced below 50,000 euros?
No. The minimum amount is fixed by law at 50,000 euros. There are no exceptions.
Deadlines for Companies Already Registered in VIES
Companies that were already registered in VIES as of April 14, 2025 are not exempt from the obligation.
They must provide the guarantee by June 13, 2025.
If the guarantee is not submitted, the company will be excluded from VIES after an additional 60 days from receipt of the certified notice sent by the Italian tax authorities.
What Happens If You Do Not Provide the Guarantee
The consequences are immediate and serious.
The company is removed from VIES.
It loses VAT exemption rights.
It can no longer carry out intra-EU transactions.
European clients stop doing business with the company.
In practical terms, operations come to a halt.
Current Legal Situation
There are ongoing appeals before Italian administrative courts. However, the rule is currently fully in force.
Until a final court ruling is issued
the guarantee must be provided
the obligation must be respected
exclusion from VIES is automatic in case of non-compliance
Waiting exposes companies to a concrete risk of business interruption.
When the Insurance Guarantee Bond Is Mandatory
An insurance guarantee bond is mandatory when:
- the company is non-EU or non-EEA
- operates in Italy through a fiscal representative
- wants to register or remain in VIES
- intends to continue intra-EU transactions
It is the most commonly used solution because it does not freeze liquidity and is accepted by the Italian tax authorities.
Documents Required to Issue the VIES Guarantee
It is important to be clear from the beginning.
Typically, the following documents are required:
- company registration or commercial registry extract from the country of origin
- articles of association or incorporation documents
- available financial statements or economic declarations
- valid ID of the legal representative
- UBO information for anti-money laundering compliance
Translations of key documents are often required.
In some cases, sworn translations or apostilles may be requested.
Each insurance company evaluates the case individually, but having complete documentation significantly speeds up the process.
How Long Does Issuance Take?
Once all documents are submitted correctly
the underwriting process usually takes a few business days
issuance can be completed quickly
Delays are almost always caused by incomplete or non-compliant documentation.
Final Considerations
VIES registration is no longer a simple administrative formality. It has become a real barrier to entering the European market.
The VIES guarantee bond is the price to pay to continue operating in Europe through Italy.
Companies that act in advance remain operational.
Those who underestimate the obligation risk bringing their business to a complete stop.
If you need immediate assistance, contact us online or call one of our offices.
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