Italy: Marketplace to buy & sell VAT fulfilments

In order to combat VAT fraud in online transactions, a specific measure has been adopted in Italy in 2019 (Art. 11-bis, Para 11-15, Law Decree 135/18, converted by Law 12/2019).

The focus is on “sensitive” products, i.e. mobile phones, games consoles, tablet PCs and laptops. Before now, these products were already under special scrutiny. In fact, Italy has implemented the reverse charge mechanism with regard to B2B supplies of these products carried out during the distribution phase, which occurs prior to the retail phase.

Now, new VAT measures have been implemented, focusing on B2C supplies of these products that are facilitated by entities (so called “marketplaces”) through the use of an electronic interface, i.e. a virtual market, platform, portal or similar means. In operational terms, if the related requirements are met, the marketplace is deemed to have received and then sold the goods.

Subject matter and scope

An entity (referred to as a “marketplace”) which, through the use of an electronic interface, i.e. a virtual market, platform, portal or similar means, facilitates the following transactions is deemed to have received and then sold the underlying goods.

As mentioned above, the relevant goods are:

• mobile phones,
• games consoles,
• tablet PCs and
• laptops.

The transactions covered by these new VAT measures are:

• distance sale of the relevant goods that are imported from non-EU countries and that have an intrinsic value not exceeding EUR 150.00;
• B2C sale of relevant goods within the EU by non-EU taxable persons.

For the above purposes, it has been assumed that the person selling the goods through the electronic interface is a taxable person and that the person purchasing the goods is a non-taxable person.

Obligations of marketplaces

As a result of the new VAT measures, the marketplace becomes the person liable for payment of VAT to the tax authorities.

In other words, the transaction is split into two subsequent sales:

• the supply from the supplier to the marketplace (B2B transaction); and
• the supply from the marketplace to the end customer (B2C local sale).

With regard to the supplies of goods carried out, the marketplace shall:

• have adequate documentation; such documentation shall be sufficiently detailed so that the tax authorities of the EU Member States in which the underlying transactions are taxable can check that the related VAT has been recognised correctly;
• upon request, make available such documentation, in electronic format, to the EU Member States involved;
• retain such documentation for a period of 10 years (following the year in which the transaction was performed).

If the marketplace is established in a State that has not signed a mutual assistance agreement with Italy, said marketplace must appoint an intermediary who will act in its name and on its behalf.

With regard to ongoing VAT fulfilments referred to during the initial period of implementation of these new VAT measures, specific postponements of the related deadlines have been granted (see DPCM 28 February 2019).

Entry into force

The new VAT measures under analysis shall apply with effect from 13 February 2019, i.e. the date of the entry into force of the law converting Law Decree 135/2018.

Interaction with EU rules

These new VAT measures seem not to be covered by the EU rules currently in force, so interested persons could ask the EU Commission to take subsequent actions. As a matter of fact, these new VAT measures have been applied early in 2019 to a scope of products limited to those items listed above, prior to the full entry into force of the new rules on 1 January 2021 in line with the amendments to Directive 2006/112/EC (art. 14 and 14-bis) as set forth by Directive 2017/2455/EC.

Expected developments

At the time of writing this newsletter, the Italian government is discussing a possible change to the current measure. Based on the draft available at present, the purpose is to replace the general VAT liability with the obligation to file (on a quarterly basis) the details of all the sales facilitated through the electronic interface. This would imply an extension of the application of the measure that would cover the sale of all kinds of products (and not only mobile phones, games consoles, tablet PCs and laptops) and, at the same time, it would limit the VAT liability to the case where the marketplace omits to file the quarterly communication (or files an incomplete communication) and is unable to demonstrate that the VAT has been paid by the supplier.