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Transfer Of Goods Between Italy And The EU
18 August 2015 saw it no longer possible to apply the VAT suspension regime when moving goods to be processed, without changing owner, within the EU (Italy to other countries and vice versa), where the goods at the end of processing are not returned to their country of origin.
This has come into effect following the “Legge Europea 2014” (Law of 29 July 2015 n. 115) and the new wording of art. 38, paragraph 5, letter a) and art. 41, paragraph 3 of Law Decree n. 331/93 concerning the transfer of goods to be processed/worked between Italy and other Member States.
The changes have been necessary to ensure compliance of Italian law with art. 17, paragraph 2 of the Directive 2006/112/EC and therefore to solve the issue of incompatibility detected by the Court of Justice last year, for the purpose of avoiding the formal opening of an infraction procedure by the European Commission, whose pre-litigation has already started.
Italian law previously envisaged a VAT suspension regime for the goods moved within the EU, for the purpose to be processed/worked, notwithstanding the destination of the processed goods; differently from relevant EU legislation, which applies the VAT suspension regime only at the condition that the goods, once processed, are sent back to their EU country of origin.
According to the new wording the identification requirement at the Italian Tax Office exists in all cases where the goods, after processing, do not return to their Member State of origin.
This implies, in addition to the above mentioned effects that the EU taxpayer executes through its VAT position in Italy:
- an intra-EU supply of goods, if these are sold to a taxable subject in another Member State
- an export, according to art. 8, paragraph 1 of Presidential Decree 633/72, if the goods to be sold are transported outside the EU.
In light of the significant changes brought by the new wording, it is necessary to understand whether:
- a subject that has so far operated under the VAT suspension regime is now required to be identified for VAT purposes in Italy, as well as to comply with the above obligations
- a subject that has so far operated partially under the VAT suspension regime, is now required to operate using its VAT registration number also in connection with the introduction of goods to be delivered to countries different from their Member State of origin.
It is therefore fundamental to review the behaviors adopted so far, in order to assess their correctness in light of the new regulations.