Italy: Anti-Avoidance Rules for Online Marketplaces
The Italian Parliament recently approved Law Decree no. 135/2018 making online marketplace operators liable for the VAT due on low-value imports (Euro 150 or less) of mobile phones, gaming consoles, tablet PCs and laptops, and other sales of such goods made within the EU by non-EU businesses.
Businesses facilitating distance sales of these goods are considered to be ‘intervening’ in the transaction and will be deemed to have purchased and subsequently re-sold the goods. This would involve accounting for VAT on the purchase of the goods via the reverse charge mechanism and accounting for output VAT on the onward supply to the final customer (non-taxable person) under the normal domestic rules in the Member State in which the goods are sold.
Online marketplaces facilitating distance sales of affected goods will be required to keep records of such sales. The relevant documentation must be detailed enough to allow the tax authorities of the EU Member States where such sales are taxable to verify that VAT has been correctly accounted for. It must be made available upon request of the Member States concerned and must be kept for a period of ten years starting from 31 December of the year in which the transaction is carried out.
Facilitators of distance sales who are established in a country with which Italy has not signed a mutual assistance agreement will be required to appoint an intermediary to act on their behalf.
Further clarifications are expected concerning the practical consequences of the new provisions and the exact determination by means of the HS code of the affected goods. There are also question marks over whether these new rules are in line with the above-mentioned EU Directive 2455/2017/EC, and it remains to be seen how they will be viewed by the European Commission and the other Member States.
The Italian Department of Finance has released new lists of government and private sector entities covered by Italy’s split-payment mechanism.
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