VIES Guarantee and VAT Bond: Two Different Paths to Your Fiscal Peace of Mind

Operating in international markets is a fantastic growth opportunity, but navigating the maze of tax regulations can feel overwhelming. If you’re involved in intra-EU transactions or VAT refunds, you’ve likely come across two terms that often cause confusion: VIES Guarantee and VAT Bond.

At first glance, they might seem similar: both are guarantees, both relate to VAT. However, they serve completely different purposes, are governed by distinct regulations, and confusing them can lead to operational delays, unexpected costs, and, in the worst cases, hefty penalties.

The recent introduction of a mandatory guarantee for non-EU/EEA entities to register in the VIES system (as per Legislative Decree 13/2024, implemented by Provision No. 178713/2025) has brought these tools into the spotlight, making it essential to understand them clearly.

In this guide, backed by over 20 years of experience in insurance surety bonds, we’ll finally bring clarity. We’ll walk you through the key differences between the Fiscal Representation Guarantee (VIES Guarantee) and the VAT Refund Guarantee.

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At italiafideiussioni.it, we provide Online Insurance Bonds for companies with fiscal representatives throughout Italy, including the islands.

VIES Guarantee and VAT Bond: Why All the Confusion?

The root of the confusion is simple: both instruments are financial guarantees related to VAT. However, their purposes are totally different.

Think of it this way:

• The VIES Guarantee is like a membership card required by a foreign guest (non-EU entity) to enter an exclusive club (the EU Single Market) and prove they’ll follow the rules. No card, no entry.
  
• The VAT Bond, instead, is like a fast-pass that a club member (any business) can use to quickly get a benefit (a VAT refund), without waiting for all the usual checks.
  

One lets you access, the other speeds things up. Understanding this distinction is the first crucial step to choosing the right tool.

The VIES Guarantee: The Gateway to the EU Market for Non-EU Entities

The VIES Guarantee (technically a Fiscal Representation Surety Bond) is a new requirement aimed at strengthening VAT fraud prevention across the EU. It stems from Article 35, paragraph 7-quater of Presidential Decree 633/1972 and targets abusive behaviors related to VAT on imports.

Who needs it?

 It is mandatory for non-EU/EEA taxable persons who appoint a fiscal representative in Italy to comply with VAT obligations and intend to carry out intra-EU transactions.

How does it work?

Before being included in the VIES (VAT Information Exchange System), the non-EU/EEA business must provide an appropriate guarantee. This protects the Italian Revenue Agency in case the foreign party fails to pay VAT.

Summary Box: VIES Guarantee Requirements

Want more details? Read our Complete Guide to the VIES Guarantee.

The VAT Refund Bond: Fast and Safe Access to Liquidity

The VAT Bond is a well-established tool that addresses a common business need: cash flow. When a company has a significant VAT credit, it can request a refund from the Revenue Agency.

However, for refunds over €30,000, the law requires in-depth audits that can take months.

Who needs it?

Any business, Italian or foreign, that is entitled to a VAT credit and wants to get the refund quickly without waiting for the lengthy audit process.

How does it work?

It is optional. When requesting a refund, the company submits a surety bond that guarantees the State for the full credit amount. As a result, the Revenue Agency releases the funds almost immediately. If the credit is later deemed invalid, the insurer repays the State and seeks reimbursement from the company.

Summary Box: Key Points on the VAT Bond

VIES Guarantee vs VAT Bond: Side-by-Side Comparison

Real-World Cases: Let’s Put Theory into Practice

Case 1: Canadian E-commerce “MapleShop”

 MapleShop wants to sell products in Italy and France. It appoints a fiscal representative in Milan and files its start-of-business declaration. To invoice French business clients without VAT (intra-EU operations), it needs VIES registration.

What must it do? Before applying, it must provide a VIES Guarantee of €50,000 valid for 36 months. Only after submission and approval by the Revenue Agency can its representative complete the VIES registration.

Case 2: Italian Metal Company “Acciaio S.p.A.”

 Acciaio S.p.A. has a VAT credit of €150,000 and needs liquidity for a new machine. Standard refund timelines are too long.

What can it do? It can apply for the refund while submitting a VAT Bond of €150,000. The Revenue Agency will release the funds within weeks, enabling the investment.

Mistakes to Avoid and Risks: A Wrong Step Can Be Costly

Sailing these waters without a reliable compass can be dangerous. Here are common errors and their consequences:

• Submitting the wrong guarantee: Applying for VIES registration with a VAT refund bond leads to immediate rejection, wasting time and money.
  
• Not submitting the VIES Guarantee: Mandatory entities that fail to do so are automatically excluded from the VIES system. This blocks intra-EU VAT-exempt transactions, effectively halting business operations.
  
• Liability of the Fiscal Representative: The law is clear: fiscal reps must verify their client’s documents. Non-compliance could result in fines from €3,000 to €50,000, as per Legislative Decree 471/1997.
  

Ignoring these requirements is not an option. It means exposing your business to penalties, disruptions, and serious reputational damage.

Frequently Asked Questions (FAQ)