A legislative decree that applies as from 4 October 2024 (Legislative Decree No. 141/2024) introduces a very significant change to import VAT in Italy. The decree clarifies that VAT paid upon the import of goods in Italy should be classified as a customs duty, excise tax, monopoly fee or similar tax imposed at the time goods enter a country. Previously, import VAT was treated as separate and distinct from customs duties under Italian law and this position was taken by the Court of Justice of the European Union. The change, ending a decades-long debate, was made by repealing Italy’s unified Code of Customs Duties law.
As noted above, the new classification of import VAT in the legislative decree equates the VAT to customs duties, with the responsibility for collection falling on the Customs Agency. However, the decree provides two exceptions from the new rule: Import VAT will not be considered a custom duty where the goods are released for free circulation in Italy (i) without the payment of VAT for subsequent release for consumption in another EU member state (“Regime 42”) and (ii) where the goods are placed in an Italian VAT warehouse.
This change has real, practical consequences. From a VAT perspective, the new rule means that for non-EU taxable persons operating in Italy, the customs representatives—rather than the fiscal representatives—will be the persons responsible for the payment of the VAT upon import. Additionally, in situations where import VAT has not been paid, the applicable penalties will be the penalties for failure to pay customs duties rather than the penalties for failure to pay treasury taxes. And it may be possible that an omitted payment constitutes the crime of “smuggling” or that the goods for which the VAT on import has not been paid are confiscated by the customs authorities.
Although not all experts agree on treating import VAT as a tax of a different nature than “domestic” VAT, importers should be aware of the change in classification and its consequences, especially on fiscal representatives and customs representatives.
Francesco Grandolfo
Marco Bonfiglio
BDO in Italy
What has changed?
As noted above, the new classification of import VAT in the legislative decree equates the VAT to customs duties, with the responsibility for collection falling on the Customs Agency. However, the decree provides two exceptions from the new rule: Import VAT will not be considered a custom duty where the goods are released for free circulation in Italy (i) without the payment of VAT for subsequent release for consumption in another EU member state (“Regime 42”) and (ii) where the goods are placed in an Italian VAT warehouse.This change has real, practical consequences. From a VAT perspective, the new rule means that for non-EU taxable persons operating in Italy, the customs representatives—rather than the fiscal representatives—will be the persons responsible for the payment of the VAT upon import. Additionally, in situations where import VAT has not been paid, the applicable penalties will be the penalties for failure to pay customs duties rather than the penalties for failure to pay treasury taxes. And it may be possible that an omitted payment constitutes the crime of “smuggling” or that the goods for which the VAT on import has not been paid are confiscated by the customs authorities.
BDO insight
Although not all experts agree on treating import VAT as a tax of a different nature than “domestic” VAT, importers should be aware of the change in classification and its consequences, especially on fiscal representatives and customs representatives.Francesco Grandolfo
Marco Bonfiglio
BDO in Italy