VAT warehouses: operating difficulties

Law Decree no. 193/2016 introduced substantial amendments concerning VAT warehouses, regulated by art. 50-bis of Law Decree no. 331/1993. Firstly, it extended the kinds of goods that can be placed in a VAT warehouse; secondly, in an anti-tax avoidance perspective, it introduced a distinction of the possible ways to remove goods from the warehouse, i.e.: in some cases, it is still possible to pay VAT through reverse charge, while, in some other cases, VAT shall be substantially paid at the moment of removal of goods, i.e. through the use of VAT ceilings.

Moreover, the responsibility of the warehouse keeper with reference to the payment of VAT is further emphasized. This new structure of VAT warehouses does not facilitate operators in fulfilling their obligations and it seems to fail to pursue the original aim to increase the trade of goods in Italy, boosting its economy.

VAT warehouses were introduced in the Italian tax system with the main aim of avoiding a poorer treatment of goods sent to Italy from EU countries compared to those coming from non-EU countries, which could benefit from the deferral of taxation, when placed in customs warehouses before being released for free circulation.

VAT warehouses are also aimed at making Italian economy become more competitive by reducing tax burdens and simplifying the movement of goods. However, VAT warehouses have not always been used correctly over years and have led to some tax fraud cases, thus requiring the introduction of restrictive measures in order to limit damages to the inland revenue.

Such measures include art. 7 of Law Decree no. 70 dated 13 May 2011, which introduced the obligation to give proper security (proportionate to the tax), and recent Law Decree no. 193 dated 22 October 2016, effective as from 1 April 2017, which introduced important amendments to the VAT warehouse system, particularly to the removal of goods.

For example, VAT cannot be paid at the moment of removal of goods from the warehouse through the reverse charge mechanism any more, but shall rather be paid substantially at the moment of removal by the removing subject, thus implying a higher responsibility for the warehouse keeper, who must pay VAT in the name and on behalf of the concerned subject.

Nonetheless, at the time of the conversion of Law Decree into law, the cases requiring the substantial payment of VAT have been reduced, thus making the systems less uniform and creating uncertainties.

[From: Il Fisco n. 35/2017]

For further information, contact Mario Spera.