Country specific updates: Italy

Italian Tax Authority, Principle of Law No. 13 of 29 September 2021

The person entitled to recover the VAT paid on importation at customs premises is the actual final recipient of the imported goods or services, i.e. the person who will use the imported goods or services in the exercise of his/her business activity (the so-called, principio di inerenza).

In accordance with previous rulings (see, Italian Tax Authority, Ruling No. Ruling No. 4/2020; Ruling No. 6/2019 and Resolution No. 346/2008), the Italian Tax Authority confirmed that the actual recipient of the imported goods can recover the VAT paid at customs premises, whether the VAT recoverability conditions are met (Article 19 of the VAT Decree). Therefore, the ownership of the imported goods is not a necessary condition in order to recover VAT paid on importation, but rather the imported goods or services must have a “direct and immediate” link with the business activity of the final recipient.

However, according to the VAT Committee guidelines (meeting, 19 October 2011) and to the recent ECJ case law (see, case C-621/19 Weindel Logistik Service), since under Article 168, let. e) of the EU VAT Directive VAT on importation might be recovered “so far as the goods and services are used for the purposes of the taxed transactions of a taxable person”, the taxable person liable for VAT payment on importation is not entitled to recover VAT where two conditions are met, namely, firstly, where the taxable person does not obtain the right to dispose of the goods as owner and, secondly, where the cost of the goods does not have a “direct and immediate” link with his/her business activity.Notwithstanding the principles expressed by the VAT Committee and the ECJ case law which have ruled that both requirements (ownership of the imported goods and “direct and immediate” link between purchase cost and the resale price of the goods) must be met in order to recover VAT paid on imports, the Italian Tax Authority still does not apply the criterion of ownership as it is sufficient that the taxable person is the actual final recipient of the imported goods or services.

Lastly, the VAT recoverability is granted only whether the final recipient of the imported goods records the customs bill in the VAT purchase register (Article 25 of the VAT Decree). Therefore, the right to VAT deduction may be exercised in the year in which the taxable person records the customs bill and VAT could be recovered in the relevant VAT periodical liquidation (see Italian Tax Authority, Circular Letter no. 1/2018).