Country-specific updates: Italy
Main Italian Budget Law VAT News (No. 178 of 30 December 2020)
Among the several amendments set out by the Italian Budget Law here below the most relevant in the VAT field:
i. Zero rate VAT regime for supplies to fight COVID-19 emergency (par. 452 and 453)
Technically a VAT exemption regime which at the same time allows the right to recover input VAT, is introduced for the following transactions:
- the supply of COVID-19 diagnostic equipment and the supply of services strictly related to this equipment (until 31.12.2022);
- supplies of Vaccines against COVID-19, authorised by the European Commission or the Member States, and the supply of services strictly related to these vaccines (for the period running from 20.12.2020 until 31.12.2022).
ii. VAT territoriality in the maritime sector (par. 710)
For the short term rental and leasing services of pleasure boats, it is introduced a declaration obligation for the recipient of the service which must attest the actual use of the vessel within the EU. The declaration must be made and filed to the Tax Authorities using a specific electronic form to be approved by the latter (30% penalty applies if the declaration is not true). The protocol number of the declaration – duly checked by the supplier on the Tax Authorities website - filed must be shown on the relevant invoice. If the supplier does not check the declaration number and the supply is qualified as subject to VAT, the supplier himself is held liable for VAT, penalties and interest.
iii. Reinforcing the countermeasures against fraud involving the use of VAT plafond (par. 1079-1083)
With the aim to avoid abuse of law/fraud, the Tax Authorities will carry out specific risk analyses to determine whether the conditions for acquiring the status of “usual exporter” are met. In the event that the protocol number of an invalidated letter of intent is indicated on the electronic invoice, the Interchange System (the mailman system for the e-invoice) shall not allow the issue of the electronic showing the zero rated VAT regime set forth by in Article 8, par. 1, let. (c) of the Italian VAT Decree (i.e. Presidential Decree 633/72).
Italian Tax Authority Ruling No. 1 of 4 January 2021
The qualification of “usual exporter” and hence the right to use the VAT plafond applies also to foreign entity identified for VAT purposes in Italy (including UK entity post Brexit transitional period) acting as commissionaire who (i) place order for goods to suppliers (Italian, EU or non-EU established) in order to (ii) resale them to clients (Italian, EU or non-EU established) via WEB platform, without becoming the owner of the goods.
DLA Piper comment: As clarified by previous Resolutions No. 102/1999 and 80/2011, the Italian VAT representative/foreign entity directly identified for VAT in Italy can benefit of the VAT plafond rule (i.e. Article 8, par. 2, of the Italian VAT Decree) despite such rule makes reference to entity established in Italy and even after the end of the Brexit transition period. Indeed, even if the commissionaire does not hold the title of the goods that can be exported (in case of client outside Italy), he can be qualified as “usual exporter” due to the VAT fiction iuris set forth by the law with reference to the undisclosed agent scheme (mandato senza rappresentanza) which qualify the transaction “agent/commissionaire à client” as a sale of goods from a VAT perspective.
Italian Tax Authority Ruling No. 583 of 14 December 2020
The VAT exemption provided by art. 10, Presidential Decree No. 633/72 for transactions relating to the operation of betting and gaming also applies to services that have the characteristics of necessity and indispensability to carry out the collection of bets, as well as the certification service. This interpretation, therefore, includes licensing contracts for digital platforms or gaming software installed on mobile devices (IOS, Android).
DLA Piper comment: The activities provided by supplier to the concessionaire by the provider of the platform are essential to ensure the proper functioning of the games on offer, as laid down by the Italian Customs and Monopolies Authority in its note of 31 March 2014. Moreover, the operations that allow the management of the prediction or the game, including the phases of processing and definition of the data necessary to allow players to participate, as well as the phases of acceptance and collection of individual bets, benefit from this VAT exemption regime. Albeit as all the VAT exemptions, the one provided by Article 135, par. 1, let. i), of the VAT Directive concerning gaming/betting service must be interpreted restrictively, according to the Tax Authorities position, since said suppliers are rendering an essential element of the betting gaming service carried out by the concessionaires, their supplies are drag along within the VAT exempt regime.
