VAT warehouse and consignment stock in Italy
VAT tax deposit rules applied in Italy
The VAT suspension regime in Italy
VAT tax deposits in Italy are governed by Art. 50 bis of the D.L. 331/1993 (approved with modifications by L. 427/1993) and by ministerial decree D.M. 20.10.1997 n. 419.
The VAT warehouse (also referred to as "VAT suspension regime" or “VAT tax deposit”) is a custody warehouse where import goods are stored after they have been cleared (by paying customs duties and any excise duty) but without paying VAT import.
The VAT warehouse in Italy allows to keep and process, without paying for VAT, national goods and goods from other EU countries, provided that they are not destined for retail, inside the warehouse.
The advantage of storing goods imported into VAT warehouses is that the goods are in free circulation and can be picked up at any time without any special formalities, unless doing the VAT declaration. In fact, the VAT warehouse manager guarantees to the state that the owner of the goods has paid for the VAT before the withdrawal.
Example: € 100 is the amount of import of goods is subject to 5% duty and 20% VAT: under normal regime (the one without VAT warehouse) the importer will pay the state immediately € 5 plus € 21 VAT (note: VAT is calculated on the value of the cleared goods, ie € 100 + € 5 = € 105), for a total of € 26. Using the VAT suspension regime, the importer pays € 5 immediately and the other € 21 when he takes the goods from the warehouse.
So that, the VAT will be finally paid by the final purchaser.
VAT-free transactions are divided into:
a) transactions with introduction into the VAT warehouse:
- intra-EU Community purchases with introduction of goods into a VAT warehouse; the Intrastat form is compiled by the depositary;
- non - EU community purchases (goods imported into EU from outside EU): only EU community customs tariffs are payable; VAT is not paid on condition that the introduction of the goods into the warehouse is proved by the transmission of a copy of the import document to the issuing customs office and by the attestation that the goods have been taken over in the filing register;
- sales of goods directly to subjects inside the EU; these operations do not configure intra – EU community transfers, so the Intrastat forms must not be compiled; the invoice issued by the transferor does not include the VAT charge; VAT is included in the invoice if the sale is billed to the tax representative of the foreign customer instead of directly to the foreign customer;
- sales of goods listed in Table A bis (annexed to D.L. 331/1993, converted by L. 427/1993) (tin, copper, zinc, nickel, aluminum, lead, cereals, coffee, tea, cocoa, sugar, wool, bulk chemicals , were minerals, silver, platinum, potatoes) to subjects outside EU.
b) transactions within the VAT deposit:
- sales of goods stored in the VAT warehouse: the invoice is issued without the application of the VAT by the national transferors or transferees;
- provision of services;
c) withdrawal transactions of goods from VAT warehouse:
- intra – EU community supplies with shipment to a buyer in another EU member state;
- the supply of goods with transport or dispatch outside EU territory;
- provision of services relating to goods held in other VAT warehouse, even if materially carried out in neighboring premises; these operations may not exceed 60 days;
- transfer of goods to another VAT warehouse.
VAT is due at the time of the withdrawal of the goods from the warehouse in order to be sold or used in Italy; the VAT debtor is who withdraws the goods, he must be holder of VAT ID; if the withdrawal of the goods is carried out by a non-resident company without a permanent establishment in Italy, he has mandatory to appoint a tax representative or to do the direct VAT identification in Italy.
Accounts of the Italian transferee of goods stored in VAT warehouse:
1. if the seller is subject to Italian VAT, he has to issue invoice;
2. if the seller is abroad, he has to issue a self-invoice.
Who withdraws the goods from a VAT warehouse (often is the buyer (transferee)), he will have to add in the purchase invoice the services rendered and VAT, and record them in the sales register within 15 days since the date of withdrawal and in the register of purchases within the month following the extraction (Article 25 of DPR 633/1972).
VAT and consignment stock in Italy
The consignment stock provides for the use of goods deposited in warehouses in foreign markets where the seller aims to sell his goods, in order to minimize all those charges associated with the storage, transport and logistics of the same goods.
The consignment stock agreement governs the transfer of the goods of the supplier to a customer's warehouse which, according to its requirements, is entitled to make withdrawals of the goods there delivered, at any time; the property right of the goods remains of the supplier and it is transferred to the customer only when he makes a or any withdrawal of goods.
In Italy, the consignment stock agreement, so-called “conto deposito”, is not governed by law, it is a mix (called atypical agreement) of typical agreements (those ruled by law), in it there is in part the content of the “sale or return contract” (the “contratto estimatorio” ruled by articles 1556-1558 of Italian civil code); similarly to the “sale and return contract”, even with the consignment stock agreement the seller can return unsold goods without sustaining any risk. The consignment stock in Italy is a commercial agreement whose real effects are deferred at a time after the stipulation.
About the VAT rules in Italy, the consignment stock applied to goods sold by a seller in Italy to a transferee in the EU is an intra-EU community supply governed by art. 41 D.L. 331/1993 and the application of VAT occurs at the time the customer takes the goods from his warehouse (as stated by the Risoluzione Ministeriale 18/10/1996 n. 235/E of Finance Ministry).
The sending of goods to another EU country is an intra-EU community transaction, it produces tax effects only afterword:
- by the act of resale or consumption by the depositary / transferee;
- upon expiry of contractually agreed terms;
- however within one year from sending.
The characteristics of the consignment stock regime in Italy are:
- sending the goods to the customer's deposit based in another EU country;
- the Italian supplier does not have to issue an invoice, as the transaction has not yet been completed;
- the Intrastat lists must not be filled; they will be filled later when the transaction is completed;
- the “Documento di Trasporto” DDT (cargo manifest) or CRM (Convention of Merchandises par Route) also called “Lettera di Vettura
Internazionale” (international consignment note) must be filled; in which it should be written that the goods transported are only for deposit / viewing at the customer premises and that the ownership of them is not transferred yet;
- the Italian supplier must annotate the transfer of the goods to the loading and unloading register pursuant to art. 50, c.5 of D.L. 331/1993; if these records are not done, the Revenue Agency would consider the goods as sold in the Italian national territory and will pretend to recover the unpaid VAT and will decide the application of fines.
The Revenue Agency with Resolution no. 44/E/2000 stated that, in order to carry out the consignment stocks agreement in the EU, goods must be delivered directly to the customer at his own tax warehouse or at a non-tax warehouse where the goods are in full availability of the EU customer.
VAT Call Off Stock in Italy
Companies in Italy that send goods abroad have to describe the transaction when the transfer of ownership of the goods is deferred at the time of the customer's withdrawal of the goods (from a warehouse), therefore, the "consignment stock" rule applies, which provides that the invoice is issued without VAT at the time of the withdrawal of the goods or, at the latest, at the expiry of a period of one year from the dispatch of the goods inside the territory of another EU country.
In transactions with non-resident purchasers there are two different contractual possibilities:
- the "call-off stock" and
- the "consignment stock".
As a rule:
- in the "call-off stock" the recipient is an industrial enterprise that will collect the goods to use them in its production process;
- in the "consignment stock" the recipient is the commercial enterprise that will withdraw the goods to resell them.
In these cases, Italian companies must perform 2 controls before sending their goods abroad:
- to check which are the rules for VAT purposes in the country of destination and
- to check if is mandatory to get the VAT identification in the country of destination.
As a general rule, the shipment of goods to another EU country is an intra-EU Community sale, so that the Italian company has to enroll for VAT purposes in the recipient EU country.
- EU countries requiring the opening of the VAT position (eg Denmark, Estonia, Germany, Greece, Malta, Portugal, Spain and Sweden) and
- other EU countries (eg UK and France) that do not require identification by a non-resident.
If goods are sent in order to set up a "call-off stock" in an EU country requiring the non-resident supplier to register for VAT (eg Germany), the procedure that the Italian company must apply implies:
- the issue of the invoice without VAT pursuant to art. 41, paragraph 2, lett. c), of D.L. n. 331/1993 towards the EU customer; the invoice must be issued before the 15th day of the month following the transfer of the goods and the taxable amount is determined on the basis of the price of cost (Article 43 (4) of Legislative Decree 331/1993);
- the record of the invoice in the register of issued invoice within the term of issue of invoice and with reference to the month of transfer of the goods to the EU country;
- the submission of the Intra 1-bis model;
- the issue of the sales invoice to the EU customer for goods withdrawn from the EU customer.