RECLAIMING IMPORT VAT IN ITALY
Goods imported into Italy from abroad must be cleared for customs when they reach the Italian’s borders (i.e. International Airports or Sea Ports). The customs declaration is usually handled by an appointed carrier, freight forwarder or customs broker and gives rise to the payment of import duty and taxes.
Let us remind that a customs duty is applicable only when the value of the consignment is greater than €150 while import VAT is charged on commercial consignments of any value. The import VAT exemption that used to be applicable on small consignments valued at €22 or less has been removed since July 1st, 2021. Nevertheless, parcels with a value not exceeding €150 that are shipped to Italian consumers from a non-EU country can still benefit from an import VAT exemption when the foreign online retailer has opted for the IOSS registration through an Intermediary.
When a DDP terms (Delivered Duty Paid) is used for the shipment of a consignment to Italy, the carrier will generally advance the payment of import duty and VAT to the Italian customs and will send the corresponding invoice to the shipper. The latter can reclaim import VAT incurred in Italy if certain conditions are fulfilled.
Before you read further, please note that the first key condition to reclaim import VAT in Italy is to hold a customs clearance document also called Single Administrative Document (SAD) displaying the name of your foreign company as the Importer of Record (IOR) at destination. Using the name of another company as the Importer of Record (also known on the market as “IOR services”) may lead to a permanent loss of your right to reclaim import VAT. You should therefore get an EU EORI number in order to be able to act as the Importer of Record. Secondly, your foreign company should be the owner of the goods imported into Italy for business purposes.
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 behalf of the shipper.
The freight forwarder or carrier pays in advance the duty and taxes to Italian Customs and returns to the shipper an invoice corresponding to import taxes prepaid.
C. Can my company reclaim import VAT for DDP shipment to Italy ?
YES! But under the 13th Directive VAT refund procedure, this possibility is only for companies established in some non-EU countries. When the implementation of the 8th or 13th Directive VAT reclaim scheme is not possible, the foreign company can still reclaim Italian VAT if registered for VAT purposes in Italy either directly or by appointing a fiscal representative under the provisions of article 35, DPR 633/72.
D. Which countries have a VAT refund reciprocity agreement with Italy ?
Foreign companies established in the following EU and non-EU countries are eligible to reclaim import VAT paid on their DDP shipments to Italy: The 26 other EU countries | Switzerland | Norway | Israel.
If your country is not appearing in the list, you can use an alternative solution described in this article: Exporting to EU countries via France | Corintax Consulting
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 “Consignee” on the Customs document issued in Italy. To read more on the IOR requirements, please go on the page: Prepare your shipment
- The overseas business (the shipper) applying for import VAT refund in Italy is a taxable person in the 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 individuals, you can appoint an IOSS intermediary for import VAT relief on low value consignments.
- 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 September 30th of the year following the year of importation (both for EU based companies and non-EU companies).
F. Can I reclaim import VAT in Italy if the goods are not immediately sold ?
Even if your company is not selling goods imported in Italy (i.e. there is no transfer of ownership immediately after the customs clearance), you can still recover import VAT if some legal conditions are fulfilled.
Below are few examples of import flows for which you can be eligible to reclaim Italian VAT :
1- You’re shipping goods into the warehouses of an Online Marketplace facilitating your B2C sales in the EU;
2- You’re shipping networking equipment into a data centre in Italy (colocation service);
3- You’re shipping goods for storage in Italy under a consignment sale agreement;
4- You’re shipping a machine or an equipment to be incorporated into a plant built in Italy;
5- You’re shipping an equipment in Italy for rental or leasing purposes;
6- You’re shipping an engine or a machine in Italy for maintenance under a warranty agreement.
G. How long does it take before I can receive VAT refund in Italy ?
In Italy, the tax authorities examine each claim and make a decision within 6 to 8 months after having received the VAT refund application and all the relevant documents. We remind you that this is an average timescale provided for your information only. The Italian Tax Authorities can decide to run a thorough investigation on a specific claim and will send to the applicant or to its agent a letter of inquiry.
H. Further help or advice ?
If you have an inquiry about the possibility of reclaiming import VAT paid in Italy, feel free to send us a message (our email address is displayed on the right side of the contact form) or call us by dialing +33-261-536-544.
The content published here above is based on information timely as of 28th October 2021, 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.