With regards to goods in process within the European Union,
several are aspects that enterprises and manufacturers should to
consider to correctly frame the operations for VAT.
As a general rule, the Italian law envisages a suspension
regimen for goods moved from a European member state to another for
their processing. They are, in fact, movements that don't
integrate an intercommunity sale in the Country of origin and that,
as a consequence, don't give rise to a correspondent
intercommunity purchase in the country of destination.
As we can deduce from the recent sentence of the European Court
of Justice for combined causes C-606/12 and C- 607/12, the
misalignment that, on the matter, characterizes the domestic
discipline with respect to the community one, can imply problems
for the Italian enterprises if goods, once processed, are not
returned to the State of origin, as envisaged by the more
restrictive rules of the Directive nr. 2006/112/EC.
In Italy, in fact, the Law nr. 28/1997 has enforced the
Directive nr. 95/7/EC in a incomplete way, Directive that has
modified the article 28-bis, paragraph 5, letter b) of the VI EU
Directive requiring that "goods, once their processing is
ended, have to be shipped at the subject of the member State from
where they have been initially shipped or transported".
The domestic law, even also as a consequence of the enforcement of
the Directive 2006/112/EU, has, on the contrary, remained linked to
the old text of the mentioned article 28-bis, that just recalls
"the performance of a service, having as object a
manufacturing on those goods, made by the VAT subject and performed
in the member state of arrival of the shipment or of the
The attention, for enterprises delocalizing manufacturing
processes in other members States, has therefore to be stressed on
the verification of assumptions of the suspending regimen envisaged
by the local legislations, in particular when the end-product is
obtained assembling other goods purchased from local suppliers.
Assuming that goods, at the end of their processing, are subject
to an intercommunity sale, potential scenarios vary depending on
the fact that the domestic rules is conformed to the one of the
community or not.
Assuming that the Italian operator adequates its behaviour to
the content of the above mentioned sentence, the transfer from
Italy, causes, at the same time:
an "assimilated" community sale, not taxable for VAT
under article 41, paragraph 2, letter c) of the Law Decree nr.
331/1993 (so called sale to "itself"), that counts for
the formation of the VAT "plafond" and for the
acquisition of the status of "habitual exporter";
the correspondent community purchase, to be taxed in the
country of destination via the VAT number obtained in advance.
Complication will emerge if the Tax Authorities of the member
State of destination would consider that transfer as a
"suspended transfer", conflicting therefore with
the EU Directive.
In this case, in fact, is likely to deem that to the VAT number
of the Italian company, would be contested the missed application
of VAT on the purchase of goods from domestic suppliers due to the
fact that, downstream, sales don't assume the nature of
community sales, missing the territoriality's prerequisite; it
is well known, in fact, that those exchanges are not relevant in
the country of their processing if goods are sold with VAT
Basically, requalifying (ex post) the nature of the sales made
by the domestic VAT number, the plafond used (ex ante) to purchase
goods without VAT, would fall.
Under a more general profile, it is worth to verify if assembled
products fall into the discipline under exam, regarding the
transfer of goods with VAT suspension with the scope of their
The domestic law, recalling the so called
"perfectioning" operations, allows to confirm the
positive interpretation, being them defined as - under article 5,
point 37 of the EU Ruling nr. 952/2013 (EU Customs Code) –
"the processing of goods, including their mounting, their
assembly and their customization to other goods".
The EU Directive nr. 2006/112/CE, on the contrary, in defining
the intercommunity exchanges of goods with the aim of their
processing, only refers to the "processes regarding the
goods", but shouldn't there be doubts that the
perfectioning operations, together with the so called "usual
manipulations" (under article 220 of the EU Ruling nr.
952/2013) are included in the said concept.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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