RECLAIMING IMPORT VAT IN ITALY
Goods imported into Italy from a non-EU country must be cleared for customs when they reach the Italian borders (International Airports or Sea Ports).
The customs declaration is usually prepared and filed by an appointed carrier or freight forwarder. This procedure gives rise to import duty and taxes levied by the Customs Authorities. Let us remind that import duty is levied on a good having a minimum value of € 150 and import VAT is due on a product valued at least at € 22. Small goods with a value under the mentioned thresholds are exempt of duty and taxes, except in case of mail ordering.
In the course of international commerce, it is the recipient or the consignee of the cargo which usually pays the customs taxes in the country of arrival.
However, the competitive pressures of the market or issues related to the ownership of the goods can justify, in certain circumstances, that the foreign shipper bears import duties and taxes in Italy. In such a case, we talk of a shipment or a sale under DDP terms (Delivery Duty Paid).
A. What is a DDP shipment to Italy ?
DDP or Delivered Duty Paid refers to shipments where the shipper (the overseas company not established in Italy) delivers goods sourced from a non-EU country to their final destination in Italy, but already cleared for importation.
The overseas company bears all landed costs, including transportation charges, import duty and taxes levied on the goods by the Italian Customs Authorities.
B. How import duty and taxes are charged in Italy ?
When sending a Delivered Duty Paid (DDP) shipment to Italy, an overseas company handles the shipment to a forwarding agent like FedEx, DHL or UPS, to name but a few. The latter arranges customs clearance in Italy in the name and on the behalf of the shipper.
The freight forwarder or carrier pays in advance the duty and taxes to Italian Customs, and returns an invoice corresponding to the taxes prepaid to the shipper.
C. Can my company reclaim import VAT for DDP shipment to Italy ?
YES! But this possibility is limited to companies established in certain countries.
D. Which countries have a VAT refund reciprocity agreement with Italy ?
Overseas companies established in the following countries are eligible to recover import VAT in Italy for DDP shipments:
The 27 others EU countries | Switzerland | Norway | Israel.
If your country is not listed above, you can read about Single Point of Clearance as an alternative tax optimization scheme.
E. What are the requirements for import VAT refund in Italy ?
All the following conditions have to be fulfilled:
- The overseas company (the shipper) should be the Importer of Record (IOR) or the “recipient” on the Customs document issued in Italy. To read more on the IOR requirements, please go on Prepare your shipment.
- The overseas business reclaiming import VAT refund (the shipper) is a taxable person in its country of incorporation. A Tax certificate proving this status will be required.
- The customer in Italy is a taxable business registered for VAT (e.g. retailers, distributors, industrial companies, etc.). If your clients are private consumers, you are not eligible for import tax refund under the present procedure. Please contact us to set up an alternative solution.
- The amount of VAT for which a refund claim will be introduced represents at least 400 EUR both for non-EU companies and EU based companies.
- The VAT refund claim is submitted to the Italian Tax Authorities no later than June 30th of the year following the year of importation (for non-EU companies) or September 30th of the year following the year of importation (for EU based companies).
F. Is VAT refundable when the goods imported into Italy are not sold ?
Even if your company is not selling goods imported into Italy (i.e. there is no transfer of ownership), it can still recover import VAT provided that certain legal requirements are met.
The following cases are concerned:
- Networking equipment shipped from a non-EU country to a data center in Italy (colocation service)
- Goods imported for international tradeshows or exhibitions (i.e: Temporary Importation)
- Goods imported for repair, alteration or processing (i.e: Inward Processing Relief)
- Goods imported under a hire or leasing contract (e.g: Equipment Lease Agreement)
- Goods imported for warehousing before sale (e.g: Storage for e-commerce purposes)
- Goods imported as technical equipment (e.g: Measuring instruments)
For further details on your specific case please contact us
G. How long does it take before receiving the VAT refund in Italy ?
In Italy, the Tax authorities investigate on each case and make a decision generally within 12 to 18 months after having received all the documents requested.
H. Further help or advice ?
The content published here above is based on information timely as of 1 January 2020, unless otherwise indicated. Amendments to the tax laws in various EU countries covered here could have been passed recently. Therefore, readers should contact Corintax Consulting for further insights.