"NEWS of September 23, 2016-conditions for VAT exemption of advances for export"

Posted by on Sep 23, 2016

Prepayment of all or part of the consideration integrates the moment of transactions relevant to VAT, namely those that meet the objective, subjective and territorial conditions.

That event, i.e. prepayment, in whole or in part, assumes significance "substantial" price, as eligible itself to integrating taxation and thus chargeable are. Article 6, paragraph 4, of P.r.decree # 633/1972 provides that the sale or provision shall be deemed not if "before" events to occur that identify the moment of performing "ordinary" or "regardless", to be invoiced or total or partial payment of the consideration takes place; of course, in such cases, the transaction shall be deemed not "limited to the amount invoiced or paid."

Advances about export sales prior to the date on which transport/shipment cashed abroad of goods covered by the VAT exemption regime, as legally and directly dependent on a single contract concerning non-taxable supply of goods for export in accordance with article 8, paragraph 1, of the P.r.decree # 633/1972 (R.M. April 18, 1975, n. 525446 and R.M. September 7, 1998, n. 125/E).

For the purposes of the exemption, the assignor is obliged to observe the following formalities:

  • at the time of receipt for each deposit must be emitted (and subsequently recorded) the invoice, indicating that it is article 8, paragraph 1 operazione non imponibile ex, lit. a) of P.r.decree # 633/1972;
  • at the time of shipment abroad of goods must be issued (and subsequently recorded) the summary invoice of the sale, which is not taxable, with the price and details, even recording sales altogether, by all previous invoices in relation to cash advances.

Since the obligation to register the summary invoice may result in duplication of turnover concerning export sales for which have been paid advances, called summary invoice, even if subject to registration (R.M. # 125/E/1998, cited above):

  • contributes to the formation of the business volume for any balance of the consideration;
  • does not contribute to the formation of turnover if the consideration of export has already been fully paid by the deposit. In the latter case, the summary invoice issued by the transferor, which performs exclusively the function of documentation of the transaction for the purpose of completion of customs formalities, shall be recorded in separate column of the register of invoices issued.

As pointed out by the Inland Revenue with resolution No. the 1 St December 2008 456, that an operation constitutes a sale for export "direct" within the meaning of article 8, paragraph 1, lett. a) of P.r.decree # 633/1972 is irrelevant the fact that sending outside the EU of goods object of the supply occurs after the change of ownership and the down payment invoice. Split delivery is therefore not such as to exclude the exemption scheme applied to the down payment and be applied to the balance.

Community case-law has consistently specified that the deposit takes on importance for VAT purposes, in this case with the same arrangements provided for the operation is not yet executed with the transport/shipping of the goods or completion of the service, if the prepayment is connected, prospectively, to a concrete and real. To this end, all the elements that qualify the future supply must already be known to the parties and, upon payment of the deposit, it is required that the goods or services involved in the transaction are identified specifically and, therefore, non-generic (Court of Justice, case C-107/13 March 13, 2014; ID., March 7, 2013, case C-19/12; ID., December 16, 2010, case C-270/09; ID., February 21, 2006, case C-419/02).

These recommendations apply to progress payments for export, with the added remark – listed position expressed by the Supreme Court in its judgment No. 10606 of May 22, 2015 – that, for the purposes of the exemption, it is not sufficient that prepayments of rent purpose specifically identified assets, legally and directly dependent on a single agreement for a sale for export, if the same goods were released for consumption within the country before they are sent abroad. According to the judges to lawfulness, the hypothesis described occurs in the case of machinery produced by the national supplier on behalf of the non-resident customer if, once completed, will be delivered in Italy on consignment to a company of the group, namely on the basis of a title not translation risk of property that determines the "consumption".

by Marco Peirolo