The Italian tax authorities recently issued an unpublished ruling clarifying the right to deduct VAT due on imported goods.
As a general rule, the person in charge of recovering VAT paid at customs on goods imported is the actual consignee that will use the imported goods in the conduct of its business. To deduct import VAT, the consignee must be reported as the “importer” on the customs declaration (SAD) and that document must be posted in its purchases VAT register according to article 25 of the Italian VAT decree.
The Italian tax authorities have had the opportunity to analyse some cases where this general rule applies, including in a reply to tax ruling no. 4 dated 13 January 2020 and, more recently, in official clarification no. 13, dated 29 September 2021.
The recent ruling, requested by a non-EU company, presented the following facts:
The non-EU company filed a ruling request with the Italian tax authorities to determine whether it could file for a refund of the VAT paid to the Italian customs authorities (paid by its forwarders, and then recharged to the non-EU company).
According to the tax authorities’ reply, the seller may not file for such a refund, because the right to deduct VAT belongs to the consignee of the goods as shown on the customs bill and on the purchase invoices. Thus, only the consignee and “importer” of the goods may exercise the right to deduct VAT. The DDP incoterm clause does not affect ownership of the goods (which belong to the Italian customers), and its only purpose is to regulate the dispatch of goods and the fulfilment due at Customs.