Navigating the various regulations around "improper"
exports is no easy feat in Italy. The current regulations
raise doubts and do not comply with EU laws, as confirmed by a
ruling of the European Court of Justice. Even the Italian tax
authority has changed its attitude on several points.
What are "improper" exports?
These are those goods sent outside the European Economic
Community by (or on behalf of) a non-resident, within 90-days of
delivery. The transport must be handled by the non-resident
transferee, rather than the Italian national supplier/transferor,
and a copy of the invoice must be stamped by the Customs Office or
Post Office to endorse the export.
It's important to be aware that a tax-exemption only applies
if the export is completed within 90 days from the delivery of
goods to the non-resident transferee, and the goods should be
exported without being processed in the transferee's
The delivery time is defined as either the actual time of
delivery (when the transferee takes physical possession of the
goods) or the time when documentation (required to obtain the
goods) is transferred. If the 90-day window is not respected, the
goods are no longer exempt from tax and the national transferor
must apply VAT to the transaction. If the situation is not
rectified, a penalty ranging from 50-100% of the tax applies.
What's important to note is that this penalty is applied
against the national supplier/transferor and not the non-resident
transferee. For suppliers operating in Italy, the challenge is
to know how and when to act, if goods are not exported in time, and
how to recognise the transaction in the annual VAT statement.
"Improper" exports in action
The following scenario explains what actions must be taken to
mitigate the risk of a penalty.
An invoice for "improper" export goods is issued on 1
January 2016 (pursuant to section 8, paragraph b) of the
Presidential Decree 633/72).
The goods must be exported by (or on behalf of) the
non-resident transferee before 30 March 2016 (within 90 days).
Proof of export must be provided back to the national
If the export does not take place within the above period, one
of two actions must be taken:
- the transferor must apply and pay the VAT within 30 days (by
29 April 2016). The transferor can regularise the transaction by
issuing a journal entry applying only the VAT, or by reversing the
original invoice with a credit note and issuing a new invoice
showing the relevant tax (so that the VAT in question will be
accounted for in the April payment). Regardless, the transaction is
no longer considered to be non-taxable.
- if the invoice has not been regularised and the tax has not
been paid a voluntary correction should be filed. After the
correction, the transaction is no longer considered
Once a transaction has been regularised, the national seller
must enter the transaction as taxable in its annual VAT
Current Italian regulations raise some doubts about precisely
when the 90-day period begins: from the transfer of ownership or
the invoice date. The different provisions in the law suggest that,
in the case of movable property (not registered), the 90-day term
should be calculated from the date of the invoice (if there is no
proof of delivery), while for registered goods, the period should
begin from the transfer of ownership of the goods sold.
It's also important to be aware that the 90-day term set
forth by Italian law does not comply with EU laws. In December
2013, the European Court of Justice challenged the Italian law on
the basis that it denies the benefit of non-taxability even when it
may be demonstrated that goods indeed left the customs territory of
the EU (but did so after the 90-day period had expired).
Even the Italian Tax Authority has changed its attitude,
admitting that the non-taxability of exports is applicable
the seller obtains proof that goods were exported on time only
after the 30-day period given to regularise the transaction has
goods leave the EU territory after the 90-day term has expired,
as long as proof of the export is obtained.
As a result, it is expected that Italian law will be updated to
align with EU regulations.
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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