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.
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:
The transactions covered by these new VAT measures are:
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.
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:
With regard to the supplies of goods carried out, the marketplace shall:
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).
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.
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.
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.
The Global VAT Newsletter focuses on changes in compliance duties in various EU and non-EU countries
If you have any questions about WTS Global or our global services, please get in touch.
We will respond to you as soon as possible.