Country-specific: Italy

Legislative Decree No. 45 of 1 June 2020

The Legislative Decree dated 1 June 2020, No. 45 , concerning the implementation of EU Directive No. 2017/2455, amending the VAT Directive and Directive No. 2009/132/EC as regards certain value added tax obligations for the supply of services and distance selling of goods, was published in the Official Journal (Gazzetta Ufficiale) No. 145 of 9 June 2020 and entered into force since 10 June 2020.

In particular, Article 7-octies was added to the Italian VAT Decree (i.e. Presidential Decree No. 633/1972) introducing new territorial rules for the supply of telecommunications, broadcasting and electronic services. Said services must be considered to be carried out in Italy, if they are provided to non-taxable customers, when the customer is domiciled/resident in Italy and the amount of the services does not exceed the annual amount of Euro 10,000.

Otherwise, these services are territorially relevant in the State of establishment of the customer, where the service provider can pay the tax through the adoption of the special MOSS scheme. The decree amends also Article 74-quinquies of the VAT Decree by increasing the number of providers of services who can access the – MOSS regime.

DLA Piper comment: The implementation of Directive 2017/2455 represents a big step forward for the VAT world in Italy. However, the same provisions and underneath legal framework is expected to evolve again and again in the future due to the adoption on July 15, 2020 by the European Commission and the Council of the Action Plan for fair and simple taxation supporting the recovery strategy which includes the VAT e-commerce Package.

Italian Supreme Court, judgement No. 14864 of 13 July 2020

In the case of business leases, there is no relevance for VAT purposes for the transfer of the inventory of goods from the lessor to the lessee, being assets already included in the business leased. As a consequence, there is no autonomous VAT sale in case of their return from the lessee to the owner of the business at the end of the contract. In fact, the assets organised according to the company's operations, including the inventories, are always considered (save different common intention of the parties) as a single business unit and remain in the hands of the lessor, who grants the lessee the right to exploit the productive assets represented by the company.

DLA Piper comment: The Italian Supreme Court adopted a conclusion in line with the art. 19 of the Principal VAT Directive concerning transaction involving going concern. From a VAT perspective, the components included in a going concern cannot have separate and autonomous treatment.