VAT Triangulations in Italy
VAT rules in Italy for international sales agreements involving 3 entities
The VAT treatment in Italy for triangular transactions with EU and non EU partners
Triangular transactions with foreign countries are transactions involving the sale of goods in which the goods are subject of two separate sales contracts but for which one single movement of goods is realized and there are 3 different economic entities located in more than one state:
1) the Italian seller being commissioned
2) by the Italian buyer (or intra-EU Community buyer in case of EU triangulations) to deliver the goods
3) to a foreign customer (both intra- EU Community and non-EU) for his order and on his behalf.
The following is a description of the VAT treatment in Italy of the main triangulation cases, indicating the type of invoice document that can be issued (immediate invoice, deferred invoice or super-deferred invoice):
- national triangulations (from Italy) with a EU Community operator;
- national triangulations (from Italy) with non-EU Community operators;
- intra-EU Community sales (sales in the EU country);
- indirect exports (sales to non-EU countries) as per Article 8 (1) a), DPR 633/72;
- indirect exports (sales to non-EU countries) as per Article 8 (1) b), DPR 633/72.
Deferred invoicing is possible, pursuant to art. 21, co. 4, lett. a), DPR 633/72, for:
- the provision of services performed in the same calendar month to the same subject;
- sales of goods whose delivery / shipment results from a transport document or other document suitable for identifying the subjects between which the operation is carried out.
In either case, only one invoice may be issued detailing the transactions by the 15th day of the month following that of the execution of the transaction.
For national triangular transactions, the promoter of the triangulation may issue the invoice in favor of its customer by the end of the month following the delivery / dispatch of the goods ("super-deferred" invoicing), pursuant to art. 21, co. 4, lett. b), DPR 633/72; the deferment, in the latter case, operates where the goods, purchased by the transferee to be subsequently ceded to its own client, are delivered to the latter by the transferor's disposition directly by the first assignor.
National triangulations with an EU Community operator
The triangular operation involves 3 economic operators:
1) company B (first transferor) in Italy;
2) company A (first transferee) promoter of triangulation;
3) EU customer (final transferee).
In the case of triangular transactions, Company A can issue the invoice in favor of its EU customer by the end of the month following the delivery/shipment of the goods (ie "super-deferred billing”, fatturazione super-differita), as an alternative to the normal instant invoice.
In the sales invoice issued by company A, the words "VAT non-taxable transaction in accordance with Article 41, DL 331/1993" shall be indicated. Company A is required to compile the Intrastat modules.
Company B may issue, with respect to Company A, either an Invoice or a Deferred Invoice. For deliveries of goods for which a delivery or transport document has been issued, the invoice may be issued by the 15th of the following month; the invoice must be accompanied by the number and date of the individual delivery documents; the invoice must indicate the words "Non-taxable transaction as per Article 58, DL 331/1993 - This is a triangular transaction aimed at an EU transferee".
In order to the existence of a non-taxable VAT triangulation it is not important the fact that the it is carried out by or on behalf of the transferor, but it is decisive the evidence that the operation, according to the documents, was intended by the parties as a national transfer aimed to the subsequent transfer to a foreign transferee.
In addition to being able to issue a super-deferred invoice, Company A also benefits from the deferral of VAT eligibility, since, for national triangular deliveries, VAT is payable in the month following that of its execution.
For sales of goods with deferred invoices on the 15th day of the following month, the VAT remains due in the month in which the transactions were executed.
National export triangulations
In the case of EU Community export triangulations, two EU Community entities and one identified in a non-EU country are involved:
1) company B (first transferor)
2) company A (first transferee) promoter of triangulation;
3) non-EU customer (final transferee).
Company B issues non-taxable VAT invoice pursuant to art. 8, co.1, lett. a), DPR 633/1972; in the invoice you must indicate the words "Triangular operation" and indicate the country of destination of the goods; Company B may issue an immediate invoice or a deferred invoice.
Company A issues an non-taxable VAT invoice pursuant to art. 8, co.1, lett. a), DPR 633/1972; Company A is advised to issue an immediate invoice, also to facilitate the execution of customs formalities.
Intra-EU Community sales
If a direct sale to an EU customer (intra-Community sale) is made, the sales invoice must be issued within the 15th day of the month following that of the transaction. The invoice must state the following wording: "VAT non-taxable transaction in accordance with Article 41, DL 331/1993". You can not issue a super-deferred invoice.
In the case of direct export (direct export without commission), ie when delivery is made by the Italian supplier to the non-EU transferee, it is not possible to issue the deferred invoice and not even the super-deferred invoice; an immediate invoice must be issued, with the words "Non-taxable VAT transaction pursuant to art. 8, co. 1, became. a), DPR 633/72 ".
In case of indirect export from Italy, if the transport or shipment is carried out by the non-resident or on its behalf, exit from the EU territory must take place within 90 days since the delivery; the sale is not VAT taxable under art. 8, co. 1, became. b), DPR n. 633/72; the invoice must be issued immediately and, therefore, it will not be possible to issue a deferred or super-deferred invoice.
In all these cases, both company A and company B, have to preserve and provide, in the case of controls, certain proof of the exit of the goods from the national territory.