Prepared by Davide Accorsi, Stefano Luigi Airaghi and Cristina Mosca
With the reply to ruling no. 32/2023 of January 13, 2023, the Italian tax authorities provided additional clarifications on the recovery of VAT charged in case of regularization of indirect exports referred to in Article 8, paragraph 1, letter b), of Presidential Decree no. 633/1972, updating the clarifications previously provided with Resolution no. 98/E of 2014, in the light of the regulatory changes on methods and timing within which exercise the right to deduct VAT introduced by Law Decree no. 50 of April 24, 2017, converted, with amendments, by Law no. 96 of June 21, 2017.
In the reply to ruling under discussion, the applicant carries out exports under Article 8, paragraph 1, letter b), of Presidential Decree no. 633/1972, but, given the difficulties in recovering the proof of exportation within the ninety-day period from the delivery of the good, in the following thirty days regularizes the invoices by issuing debit notes reporting only VAT pursuant to Article 7, paragraph 1, of Presidential Decree no. 471/1997, without recovering from the client the VAT paid.
Subsequently, after receiving the proof of export, it issues and records credit notes to recover the VAT paid with the previous debit notes.
The behavior of the applicant would be in line with the instructions provided in the previous Resolution no. 98/E of 2014, which, however, requires complying with the issuance and registration of the credit note by “the deadline for submitting the declaration related to the second year following the year in which the export took place.” This deadline, however, does not take into account the reduction of the deadline for the issuance of credit notes introduced by the aforementioned Decree Law no. 50 of April 24, 2017 and the subsequent clarifications provided by Circular letters no. 1/E of 2018 and no. 20/E of 2021.
Given the above, the applicant asks the Italian tax authorities to clarify:
- the time when the right to deduct arises for the taxpayer; and
- whether, for this purpose, it is necessary to proceed with the issuance of a credit note to the client.
After going over the national legislation and the main EU case law, as well as the above-mentioned Italian tax authorities’ guidance, with reference to the first question, the Italian tax authorities point out how indirect exports referred to in Article 8, paragraph 1, letter b), of Presidential Decree no. 633/1972, consist of two moments: that of the delivery of the goods in Italy to the non-resident client and that of the subsequent “physical” export of the same by (or on behalf of) the latter. Of the “physical” exportation, the client must collect proof, without which, to avoid the application of the proportional penalty from 50 to 100 percent of the VAT not applied, the invoice must be regularized, pursuant to Article 7, paragraph 1, of Legislative Decree no. 471 of 1997, by issuing the debit note and paying the VAT.
With reference to the second question, the Italian tax authorities specify that to recover the VAT paid during the regularization it is therefore possible to:
- proceed with the issuance of a credit note pursuant to Article 26, paragraph 2, of Presidential Decree no. 633/1972, within the deadline for the submission of the annual return related to the year in which the prerequisite is intended to be fulfilled, to be seen as the moment in which both the substantial prerequisite of the export having taken place and the formal prerequisite of the issuance of the debit note to regularize the non-taxable invoice are considered fulfilled, after which the VAT to be recovered is paid and which, for effect, represents the dies a quo for the issuance of the credit note; or
- where the issuance of the credit note is no longer permitted, because the proof of exportation has been acquired beyond the time limit within which the credit note could be issued, not configuring ”culpable” inertia of the applicant, it is possible to submit a refund claim, pursuant to Article 30ter of Presidential Decree no. 633/1972, according to which the taxable person could submit a claim for the refund of the VAT not due within the term of two years from the date of payment of the same or, if later, from the day on which the prerequisite for the refund occurred. In such a case, since the payment made because of the issuance of the debit note cannot be qualified as undue, the prerequisite for the refund claim will be the acquisition of the proof of exportation.
On the contrary, it is not possible to replace the issuance of the credit note with a direct adjustment entry in the VAT registers, as provided for in Article 26, paragraph 8, of Presidential Decree no. 633/1972. Such a procedure, in fact, would be incompatible with the need to track the variation with a document and with Article 1, paragraph 3bis, of Legislative Decree no. 127/2015, which provides for the telematic tracking of transactions made with parties not established in the territory of the State (so-called, esterometro).
 According to the applicant, in fact, the regularization never comes from a missed export, but from a mere delay in obtaining the information.
 Which, inter alia, clarifies that the dies a quo from which the time limit for exercising the right of deduction begins is the moment when both the following two conditions occur:
- the substantial one, of the tax becoming chargeable (i.e., the tax point of the transaction);
- the formal one, of the possession of a valid purchase invoice.
As for the dies ad quem within which to exercise this right upon registration of the invoice complying with Article 25, paragraph 1 of Presidential Decree no. 633/1972, this coincides with the deadline for the submission of the annual VAT return related to the year in which both these conditions occurred.
 Which, inter alia, clarified that, for the purpose of exercising the right of deduction in the case of issuance of credit notes, the time of issuance of the credit note, which is the formal prerequisite necessary for the concrete exercise of the right, is relevant. Specifically, once said credit note is issued in a timely manner – within the ordinary submission deadline of the annual VAT return related to the year in which the prerequisites for making the variation have been met – the deducted VAT may be included in the relevant periodic settlement or, at the latest, in the relevant annual VAT return.
 Taking the example given by the Italian tax authorities, let’s consider an indirect export that takes place with delivery of the goods and invoice issued on December 30, 2021 (substantial prerequisite) and for which the 90 days set forth by Article 7, paragraph 1) of Legislative Decree No. 471 of 1997 would expire on March 30, 2022. The regularization procedure operable from the 91st to the 120th day thereafter with the issuance of a debit note reporting only VAT can be completed by April 29, 2022 (formal prerequisite). The issuance of the credit note must ordinarily take place by April 30 of the year following (deadline for submission of the annual VAT return) the one in which the prerequisite was fulfilled, both from the ”substantial” point of view (export supply) and from the ”formal” point of view (issuance of a debit note), i.e., until April 30, 2023. Therefore, if the credit note is issued by December 31, 2022, the deadline for exercising the deduction will coincide with the deadline for submitting the Annual VAT return for year 2022, i.e., April 30, 2023. On the contrary, in the event that the credit note is issued between January 1, 2023 and April 30, 2023, the deadline for exercising the deduction will coincide with the deadline for filing the annual VAT return for year 2023, i.e., April 30, 2024.
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