VAT treatment of e-commerce under “omnichannel” policies in the European Union

Prepared by Davide Accorsi, Stefano Luigi Airaghi and Paola Bramato

With its recent ruling replies No. 51 and 58, published last Jan. 17, 2023, the Italian tax authorities returned to the issue of intra-EU distance sales and the One Stop Shop (so-called “OSS”) regime.

In its ruling reply No. 51, the Italian tax authorities examined the application of a fashion house that conducts distance sales to end consumers in the EU through an articulated, so-called “omnichannel” business model involving its own boutiques, electronic platforms and third-party companies and that trespassed the 10.000 euro threshold.

More specifically, the applicant puts forward three possible scenarios.

Scenario 1

In the first scenario, the end consumer purchases goods through an electronic platform or from the Italian boutique of the applicant. In both cases, the goods are sent from the Italian warehouse of the Italian company or from its Italian boutique to the customers’ home in Germany.

On this point, the Italian tax authorities confirm that not applying the deem supplier discipline (even if the sale is facilitated by an electronic interface, the supplier is a taxable person established in the EU) and since the condition of transporting the goods to another EU Member State by the supplier is met, the conditions for qualifying these transactions as intra-EU distance sales are met. Therefore, the related VAT obligations can be fulfilled through OSS upon exercising the option by registering with the relevant web portal in Italy.

The Italian tax authorities did not feel empowered to comment in the reverse hypothesis, i.e., in the case where the supplier is established in Germany and the final consumer in Italy, as this is something falling outside their competence.

In this regard, due to the obligation of EU Member States to ensure uniform transposition and application to EU provisions, it is reasonable that the same conclusion should be reached, i.e., that the German supplier can declare the mentioned sales through OSS in Germany.

Scenario 2

In the second case, the French final customers purchase goods through an electronic platform. The goods are previously sold to the applicant by a German company in the same group and are shipped from a warehouse of the applicant located in Germany to end customers in France. The transportation is handled by a third-party shipping company on behalf of the applicant, having a VAT identification in Germany.

In this case, the Italian tax authorities confirmed that the circumstance that the goods are shipped to France from the applicant’s warehouse does not preclude the qualification of the transaction as an intra-EU distance sale and, therefore, the French VAT can also be paid through the special OSS regime with respect to such transactions in Italy.

The sale between the German company and the Applicant can only be qualified as a domestic sale in Germany since the goods are in German territory.

Scenario 3

In the last scenario, French final customers purchase goods through an electronic platform. Specifically, at the time the customers place the order online, the applicant purchases the goods from the German group company and simultaneously sells them to the French customers. The goods are shipped to customers in France from one of the stores or the German warehouse owned by the German company with transportation by the Italian applicant. The applicant asks whether it can join the OSS scheme by registering with the portal in Italy to pay the VAT on the goods sold to French end customers and also asks how to qualify the “flash title” supply between the German company and the applicant for VAT purposes.

The Italian tax authorities, considering that in the scenario described, the applicant cannot benefit from the simplifications provided by the OSS special scheme, clarify that the transaction should be broken down into three separate transactions:

  • the first transfer between the German company and the applicant, which constitutes a local sale in Germany;
  • the transfer of the applicant’s own goods from Germany to France, which constitutes a deemed intra-EU supply with the consequence that the applicant is required to register for VAT purposes in France to account for the deemed intra-EU acquisition; and
  • the supply to French final consumers, which constitutes a local sale in France.

In this regard, it is worth noting that the Italian tax authorities’ response appears to be at odds with the clarification made by the VAT Committee’s Working Paper No. 1040 cited by the tax authorities themselves in the aforementioned ruling reply as a document to which the clarification should align.

On this point, the said Working Paper clarifies that “an intra-Community distance sale of goods can occur in certain B2B2C chain transactions where the transport is made by or on behalf of the intermediary (who thus becomes an intermediary operator within the meaning of Article 36a(3) of the VAT Directive) and in addition that intermediary (i) is VAT registered in the Member State from which the goods are dispatched or transported and (ii) does not communicate to his supplier a VAT number assigned to him by a Member State other than that from which the goods are dispatched or transported. In that case, the supply between the two businesses (the first supplier and the intermediary operator) will be a domestic transaction taking place in Member State 1 followed by an intra-Community distance sale of goods which the intermediary must declare in the Union OSS if he has opted to register in that scheme”

This apparent inconsistency could be justified by the fact that the fashion house does not seem to have emphasized in the ruling request the possibility of being able to use its own VAT number in Germany by communicating it to its supplier (i.e., the German group company).

In the writer’s opinion, the VAT treatment of the described transaction, in the event that the Italian company communicates its German VAT number to the German group company, should be aligned with what was clarified by the aforementioned Working Paper. Therefore, the use of the OSS should be allowed for this transaction as well, thus ensuring the simplifying purpose of the reforms introduced by the EU on e-commerce.

Finally, in its ruling reply No. 58 of January 17, 2023, the Italian tax authorities confirmed that, if the requirements for the option to the OSS regime are met, a company not established and without a fixed establishment in Italy is required to register with the EU OSS window of the Member State of establishment, regardless of whether there is logistics in a different EU Member State (in this case Italy), belonging to a third party, from which the company ships goods to the relevant customers.

In any event, domestic distance sales, i.e., supplies of goods located in the same Member State of the purchaser to whom they are sent, remain excluded from the aforesaid regime, unless they are facilitated through the use of an electronic platform as provided for by Article 74 sexies, paragraph 4, letter d) of Presidential Decree No. 633/1972. In the case at hand, in particular, once it has registered with the EU OSS in the country of establishment (Ireland), the Applicant company will indicate in the relevant OSS VAT return only the intra-EU distance sales made. On the contrary, sales in Italy of goods stored there at third party logistics facilities are deemed to be domestic supplies and will have to be included in the Italian VAT return, subject to identification of the Applicant.

Let’s Talk

For a deeper discussion, please contact:

Davide Accorsi

PwC TLS Avvocati e Commercialisti


Stefano Luigi Airaghi

PwC TLS Avvocati e Commercialisti

Senior Manager