Prepared by Davide Accorsi, Stefano Luigi Airaghi and Cristina Mosca
With the reply to ruling No. 271, dated 3 April 2023, the Italian tax authorities ruled on whether or not the call-off stock regime can be applied in the case of triangular intra-Community transactions.
The applicant, Alfa, is a company that designs, manufactures and markets components for motor vehicles and cars, whose production activity is located in Italy and whose products are marketed and distributed in Europe.
Alfa, which is also identified for VAT purposes in EU Country X, intends to enter into a call-off stock contract with company Beta, which is located in EU Country Z and has a permanent establishment in EU Country X. On the basis of the above-mentioned contract, Alfa would deliver the goods in Italy with FCA incoterm to the company Gamma, Beta’s customer, established in EU Country X and VAT identified also in EU Country Y.
The goods, made available in Italy by Alfa, would be transported by Gamma or by a third party on its behalf in EU Country X to a warehouse controlled directly by Gamma or its nominees and would remain Alfa’s property until they are withdrawn by Gamma. The latter would take care of the subsequent transport of the goods in EU Country Y to its own production facility.
At the time of withdrawal of the goods from the warehouse in EU Country X by Gamma there would be two simultaneous changes of ownership: the first from Alfa to Beta, the second from Beta to Gamma.
Ultimately, under the call-off stock contract that would be entered into between Alfa and Beta:
- the goods stored at Gamma’s warehouse, although formally owned by Alfa, would be at the full disposal of Gamma, which could use them at any time for its own production and commercial needs;
- Gamma would bear the risks and liabilities for damage to the stored goods from the time of taking delivery of the goods at Alfa’s plant in Italy until their withdrawal from Gamma’s warehouse located in EU Country X.
The applicant asks whether it is possible to apply the call-off stock contractual scheme governed by Article 41-bis of Decree-Law No. 331 of 30 August 1993, entitled “Intra-Community sales under the so-called call-off stock regime”, to the relationship between the first supplier (the applicant) and the intermediary operator (Beta) even though this transaction is part of a broader operation that can be traced back to an intra-Community triangulation.
The Company specifies that it will align to the answer provided by the Italian tax authorities also from an operational point of view (with reference, for instance, to the preparation of proxies and drafting of contracts).
The Italian tax authorities, after briefly outlining the scope of application of the call-off stock, regulated at a European Union level by Article 17-bis of Directive 2006/112/EC and implemented in our legal system by Article 41-bis of Decree-Law No. 331/1993[1], lists some of the conditions required for the application of such regime, highlighting in particular that:
- the supplier and the purchaser must be taxable persons;
- the supplier must know from the beginning of the dispatch or transport the identity of the customer, who must be identified for VAT purposes in the Member State where the goods are transferred;
- the supplier must not have established his business or have a fixed establishment in the Member State to which the goods are dispatched or transported;
- the transfer of the goods belonging to the taxable person must be carried out “by the supplier or by a third party on his behalf”[2] (See Article 17-bis (2)(a) of Directive 2006/112/EC and Article 41-bis (1)(a) of Decree-Law No. 331/1993).
Considering these conditions, and in particular the last one, the Italian tax authorities reaffirmed that in order to be able to apply the simplification of the call-off stock regime to the agreement between Alfa and Beta, it is essential that the transfer of the goods from Italy to EU Country X is carried out by Gamma on behalf of Alfa.
It should also be stressed that Alfa, as supplier, must retain title to the goods shipped or transported to the territory of the other Member State in order for Beta, after their arrival, to acquire title to them as designated consignee.
The supply contract between Alfa and Beta can therefore qualify as a call-off stock contract only if the above conditions are fully met.
With reference to the “extensibility” of the suspensive effect of the call-off stock regime to intra-Community triangular transactions, the Italian tax authorities specified that the operational scope of such regime must be “limited to the intra-Community transaction between the supplier and the designated purchaser”, involving exclusively such persons. It is therefore not possible to extend its effectiveness to further transactions.
It follows that, where the supply contract concluded between the applicant (supplier) and Beta (the first acquirer) fulfils the conditions required for the application of the call-off stock, the contextual sale made by the latter to Gamma (the final acquirer) should be considered as a separate transaction, autonomous and distinct from the transaction immediately preceding it.
[1] According to which ”an exempt with right to deduct intra-Community supply in the Member State of dispatch or transport and a taxable intra-Community acquisition in the Member State of arrival of the goods occur only when the customer acquires ownership of the goods dispatched or transferred there”.
[2] Both national and EU rules actually indicate that the goods must be transported by the “taxable person”, who is in fact the supplier, or by a third party on his behalf.
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