Assessment of the VAT plafond and the execution of purchases and imports without VAT payment: clarifications by the Italian Revenue Agency

published on 8 October 2024 | reading time approx. 5 minutes

Through the publication of Legal Advice Request No. 3 of 6 August 2024, the Revenue Agency comments on the matter of the calculation of the VAT plafond for those who have the status of habitual exporters pursuant to Article 8, para. 1, letter c) of Presidential Decree No. 633/1972.

This is a special scheme that allows parties who frequently perform export and intra-Community supplies to make purchases and imports without VAT payment by offsetting the debt with the credit accrued on exports and non-taxable intra-Community supplies. This does not represent a relief in the narrower sense, since there is no reduction in the amount of VAT due, but rather a tool, available to operators who systematically find themselves in a tax credit position, designed to remedy the delays accumulated by the financial administration in the execution of refunds, as well as to allow the simplification of the creditor relationship with the Revenue and the mitigation of financial exposure.

Since this regime is classified as a VAT tax suspension scheme, derogating from the ordinary rules, access to this procedure is subject to the strict verification of certain prerequisites. First of all, only subjects who have carried out, in the calendar year or in the preceding 12 months, export sales (pursuant to Article 8, para. 1, lett. a) and b) of Presidential Decree No. 633/1972) and intra-Community sales (pursuant to Article 41 of Legislative Decree No. 331/1993) for an amount exceeding 10 per cent of the total turnover can qualify as habitual exporters. In essence, this threshold must be calculated on the basis of the following ratio:

Exports and intra-Community supplies of goods recorded in the previous year or twelve months that contribute to the formation of the plafond are entered in the numerator;
The denominator is the turnover realised in the previous year or twelve months, less the amount of goods supplied in transit and transactions not subject to VAT in Italy.

If the percentage coefficient resulting from the above ratio is greater than 0.10, the taxpayer acquires the status of habitual exporter and may purchase or import goods and services without paying VAT, up to the limit of the amount equal to the exports and intra-Community supplies made during the period.

This figure constitutes the so-called available plafond and refers to the maximum amount of purchases of goods and services and imports that can be made under the tax suspension regime, i.e. without payment of VAT:

If the reference time window for verifying the threshold is the previous calendar year, the plafond is referred to as fixed;
If the reference time window for verifying the threshold is the previous 12 months, the plafond is referred to as mobile.

However, the habitual exporter, before making purchases without payment of tax, is obliged to submit a so-called declaration of intent to the counterparty, by which he states his intention to avail himself of this option and communicates the amount of the plafond still available, in order to allow verification whether the amount of the purchase falls within the limits.

Plafond calculation procedure: the case analysed by the Revenue Agency

The clarifications provided by the Italian Revenue Agency concern the hypothesis in which the final passage of the ownership of the goods to a non-EU taxable customer takes place at a time subsequent to the transfer of one or more down payments on the price. Specifically, since the payment of the consideration for the goods being exported takes place in several stages, generally a series of down-payment invoices are issued and, only after the goods have been tested, is a balance invoice issued for an amount net of the down-payments previously received and invoiced.

The question arises as to when these advance payments count towards the calculation of the plafond, whether at the time the advance invoice is issued and limited to that amount, or whether only when the export transaction is completed, in an amount equal to the contractually agreed total price.

In order to answer the question, the tax authorities briefly outlined the legal provisions governing the determination of the time at which a transaction is executed: Pursuant to Article 6(1) of Presidential Decree No. 633/1972, the supply of movable goods is deemed to be completed upon delivery thereof. Nonetheless, the following paragraph 4 provides that the payment of a part of the consideration anticipates the moment of performance of the supply, limited to the amount of the down payment paid: for this reason, under Italian Law, an invoice must always be issued to document the making of the advance payment.

Returning to the question of the formation of the plafond, the tax authorities referred to an earlier practice document (Circular No. 145 of 10 June 1998) in which it is emphasised that the transactions to be included in the calculation are those that are booked. Since the time of recording of the invoice depends on the date of issuance of the invoice, and that date in turn depends on the time of execution of the supply, the Circular lays down the principle that “in the case of advance payment of consideration, such amounts contribute not only to the determination of the status of habitual exporter but also to that of the plafond”.

Consistently, the conclusion expressed by the Revenue Agency is that advance payments contribute to the formation of the VAT plafond for habitual exporters already from the time of registration of the advance invoice, limited to the amount thereof; therefore, there is no need to wait for the conclusion of the export transaction and the balance invoice, since the payment of advance payments on the price anticipates the time of the transaction and consequently the time of issuance and registration of the invoice.

On this point, however, it has been specified that in the event that the export sale transaction is not actually completed, for example due to anomalies found during the testing phase of the goods, it will be appropriate to reduce the amount of the ceiling by the amount corresponding to the down payments; this observation, in turn, is the result of a previous ruling of the jurisprudence of legitimacy on the matter (Suprema Corte di Cassazione, Sezione V, Decision no. 30800/2022).