Prepared by Davide Accorsi and Stefano Luigi Airaghi
With the reply to ruling No. 465, dated November 21, 2023, the Italian tax authorities ruled on the possibility of applying the special VAT regime provided for by Art. 1, paragraphs 937 to 941, of Law No. 205 of December 17, 2017, in the case of chain supplies of fuels, introduced into Italy under excise duty suspension regime from a fiscal warehouse of another EU Member state. With the subsequent reply to ruling No. 469, dated November 28, 2023, the Italian tax authorities also provided clarifications on the effects and remediations that can be used to regularize the erroneous application of the ordinary regime instead of the special regime mentioned above.
With reference to reply to ruling No. 465, the applicant company, is a non-resident entity that could act as the second or third party, respectively, in a quadrangular[1] supply of gasoline and diesel fuel intended to be used as motor fuels and introduced under suspension of excise duty in a fiscal warehouse in Italy with movement from a fiscal warehouse in another EU Member state. The transport of the goods would always be arranged by the second party in the chain, who would always communicate to the first party in the chain its Italian VAT number registered in the VIES archive, while the last party in the chain would be the person who concludes the storage contract with an independent third party. The applicant, therefore, would never be the entity that would release the goods for consumption in Italy.
Under these circumstances, the applicant seeks confirmation that the purchases (which could respectively be local, when the applicant is the third party in the chain, or intra-EU, when the applicant is the second party in the chain) and the supplies (always local) that it intends to carry out in the circumstances described above can be considered not subject to VAT in Italy pursuant to Article 1, paragraphs 937 to 941, Law No. 205 of December 27, 2017, and in particular paragraph 939, regardless:
- from the fact that the supplies to be made will involve more than two parties;
- from the fact that the fiscal warehouses involved will be established in different EU Member states;
- whether or not the last party in the chain qualifies as a “reliable trader” and where/how the goods will be released for consumption.
On this point, the Italian tax authorities recall, first of all, that the regulations in question[2] introduced measures to combat VAT evasion in relation to the release for consumption from a fiscal warehouse or extraction from a registered consignee’s warehouse, referred to in Articles 23 and 8 of Legislative Decree No. 504 of October 26, 1995 (Consolidated Act on Excise Tax), of gasoline or diesel fuel intended for use as motor fuels and for other fuel or fuel products identified in the Decree of the Minister of Economy and Finance of February 13, 2018.
That said, with specific reference to paragraph 939 of the aforementioned provision[3] and consistent with what has already been clarified by Circular No. 18 of 2019[4], which had already pointed out that the suspension of VAT for supplies of goods carried out in the fiscal warehouse represents an exceptional measure of the VAT regime under comment, functional to protect the anti-fraud rationale[5] that inspires the entire discipline, and whose principles were reconfirmed in replies no. 376 of September 17, 2020 and No. 506 of October 19, 2021, the Italian tax authorities confirm that the transfer of automotive motor fuels (customs headings 27101245; 27101249; 27101943; 27102011) from one fiscal warehouse to another fiscal warehouse, under the suspended excise duty regime, always falls under the regime provided by Article 1, paragraph 939, of Law No. 205 of December 27, 2017, which provides for the suspension in the application of VAT.
Accordingly, the Italian tax authorities endorse the interpretative solution proposed by the applicant, according to which the discipline of Article 1, paragraph 939 of the Law under review, having ascertained the territorial relevance of the transaction, disregards the circumstance that the supplies under consideration may involve more than two parties, as well as the fact that, as part of the fuel supply transaction, one of the fiscal warehouses involved is located in a different Member state.
Moreover, although within the framework of the discipline under consideration (i.e., Law no. 205 of December 27, 2017) are established also exceptions or exclusions[6] in the presence of which the provisions of paragraphs 937 and 938 of the same Law do not apply, with the consequence that the person who releases the product for consumption from the fiscal warehouse or who extracts it from the warehouse of registered consignee charges the VAT in the ordinary way[7], the aforementioned exceptions and the subjective and dimensional requirements provided therein, in the absence of any regulatory referral, do not affect also the scope of application of paragraph 939 of the Law under review, concerning, as extensively clarified above, the supply of goods carried out in the fiscal warehouse or the transfer of fuel from a fiscal warehouse to another fiscal warehouse or between a fiscal warehouse and the warehouse of a registered consignee.
Finally, although the Italian tax authorities specify that the present reply, is beyond the scope of any assessment inherent in the integration, in the case under consideration, of the discipline of chain supplies, pursuant to Article 36a of Directive 2006/112/EC, the same seem however to implicitly recognize that the discipline of chain supplies and the special discipline of fuel supplies in comment are superimposable with each other[8].
Regarding the reply No. 469, the related ruling request was submitted by a counterparty, also a non-resident entity, which, between late 2021 and early 2022, had acted, respectively as the second and third subject in the chain, in quadrangular supply chains similar to those commented on in reply No. 465.
Specifically, the applicant company, carried out purchases (respectively, local, when it acted as the third party in the chain, and intra-EU, when it was the second party in the chain) and sales (always local) for which the ordinary taxable regime was erroneously applied instead of the tax suspension regime provided by Article 1, paragraphs 937 to 941, Law No. 205 of December 27, 2017, and in particular paragraph 939.
Specifically, during 2021, when acting as the second party in the chain, the applicant integrated with VAT the intra-EU purchase invoice received from the first supplier and issued a sale invoice to the non-resident customer applying VAT and paying it to the Treasury by the deadline of the related VAT settlement. In the same month in which the VAT payment was carried out, the applicant also issued a credit note in scope of VAT for a partial price adjustment, which resulted in the emergence of a VAT credit claimed for reimbursement through the VAT return.
Instead, in 2022, when it was the third party in the chain, the applicant received an invoice with VAT charged by its supplier and carried out a supply to an established taxable person for which the reverse charge mechanism under Article 17(2) applied. The applicant requested a refund of the VAT credit charged by the supplier, which was executed by the Italian tax authorities during 2023.
Due to the publication of the reply No. 465 and the consequent need to correct the conduct previously held in discrepancy with it, the applicant company, in relation to the first transaction, asks whether:
- it is necessary and sufficient for the regularization of the intra-EU purchase to submit a corrective VAT return pursuant to Article 8, paragraph 6bis, of Presidential Decree No. 322/1998 (first question).
- it may use, in order to obtain the refund of the VAT unduly paid to the Treasury, the “anomalous refund” ex Article 30-ter, of Presidential Decree No. 633/1972 (second question).
In relation to the second transaction, the applicant company also asks whether:
- subject to the submission of an unfavorable corrective VAT return pursuant to Article 8, paragraph 6bis, of Presidential Decree No. 322/1998 and the payment of the amount of VAT and interest refunded, for the purposes of the voluntary disclosure pursuant to Article 13 of Legislative Decree No. 472/1997, Articles 6, paragraph 2, of Legislative Decree No. 472/1997 and 10, paragraph 3, of Law No. 212/2000 are applicable, since there are objective conditions of uncertainty regarding the scope and scope of application of Article 1, paragraphs 937 et seq. of Law No. 205/2017 (third question);
- how the interest due should be calculated (fourth question).
The Italian tax authorities, before answering these questions, recalls how, with several guidance[9], the have already stated the following principles:
- in the event of erroneous application of the reverse charge by the purchaser/buyer in relation to exempt, non-taxable or non-subject transactions, pursuant to Article 6, paragraph 9-bis3, of Legislative Decree No. 471/1997, both the debt and the deductions made at the settlement stage must be expunged during the assessment, without prejudice to the right to recover any non-deducted VAT. In such a case, in order to correct the error, the purchaser/buyer would have to make mere accounting entries contrary to those erroneously made and to be neutralized. In order to recover the non-deducted VAT, he/she may, in addition, issue variation notes or, once the terms provided for in Article 26, paragraph 3, Presidential Decree No. 633/1972 have elapsed, use the “anomalous refund”, now governed by Article 30-ter, Presidential Decree No. 633/1972;
- the “anomalous refund” is of a residual and exceptional nature, and can be applied whenever objective conditions exist that do not allow the general remedy to be exhausted. This institute, therefore, cannot be used to obviate the expiration of the time limit for the exercise of the right to deduct if that time limit has expired due to “culpable” inertia on the part of the taxpayer, but can instead be used, where, for example, the taxpayer, is not entitled to issue a downward variation note pursuant to Article 26 of Presidential Decree No. 633/1972 for reasons not attributable to him.
In light of the above principles, the Italian tax authorities clarify the following.
With reference to the first question, the submission of a corrective VAT return turns out to be a necessary but not sufficient condition to regularize the reverse charge erroneously applied to transactions not subject to VAT. In fact, for this purpose, it is necessary not only to proceed with the relevant payment of the formal penalty provided for in Article 8 of Legislative Decree No. 471/1997 (possibly reduced pursuant to Article 13 of Legislative Decree No. 472/1997), but also to make the due annotation adjustments described above.
With reference to the second question, since the terms provided for by Article 26, paragraph 3, of Presidential Decree No. 633/1972 have expired and considering that the specific clarification on the possible location also abroad of the fiscal warehouse for the purposes of the applicability of the special VAT rules provided for by Article 1, paragraphs 937 to 941, of Law No. 205 of December 17, 2017 intervened only through answer no. 465/2023, the applicant can obtain the recovery of the VAT unduly paid to the Treasury through the “anomalous refund” not being recognizable a culpable inertia of the taxpayer in the failure to issue the variation note within the terms provided by Article 26, paragraph 3, of Presidential Decree no. 633/1972.
With reference to the third question, given the existence of objective conditions of uncertainty regarding the scope and field of application of Article 1, paragraphs 937 et seq. of Law no. 205/2017, it is possible to exclude, at least on the part of the applicant, the application of sanctions pursuant to Article 6, paragraph 2, of Legislative Decree no. 472/1997 and Article 10, paragraph 3, of Law no. 212 of July 27, 2000.
With reference to the fourth question, the repayment of sums unduly received as reimbursement must be accompanied by the payment of the related interest, which, in the absence of initiatives by the Office, can be identified in the measure referred to in Article 38bis of Presidential Decree No. 633/1972 (2 percent per annum with effect from the undue receipt).
[1] Although not particularly relevant to this analysis, all the parties in the chain are non-resident taxpayers, with the exception of the last party in the chain, which could also be a taxpayer established in Italy.
[2] In particular, it is recalled how paragraph 937 of the provision in comment, provides that:
- the release for consumption or extraction from the warehouses in comment is subject to the payment of VAT by F24 form, without the possibility of compensation;
- the payment must be made by the person on whose behalf the warehouse operator proceeds to release for consumption or extract the products;
- the taxable base, which also includes the amount of excise duty, consists of the consideration or value relating to the transaction prior to the introduction or the consideration or value relating to the last supply made during their storage in the warehouse and is, in any case, increased, if not already included, by the amount relating to any services of which the goods themselves have been the subject during storage until the time of extraction.
[3] Which, in theory, provides only that “the supplies of the products referred to in paragraph 937, which occur during their storage in the warehouses referred to in the same paragraph 937, shall be carried out without payment of value added tax”.
[4] According to which, inter alia, “the supply of products within a warehouse or from a fiscal warehouse to another fiscal warehouse, or to a registered consignee operating a commercial warehouse, should not be subject to VAT”.
[5] Specifically, with regard to goods kept in the fiscal warehouse, the ratio legis is to substantially align VAT chargeability with that of excise duty. On the other hand, with regard to goods introduced into the warehouse of the registered consignee, the rule intends to align VAT chargeability with that of the actual extraction of the product from said warehouse.
[6] In particular, see the provisions contained in paragraphs 940 and 941, which, however, mainly concern the person releasing the goods for consumption.
[7] Who, as initially stated, will never be the applicant.
[8] On this point, in particular, the discipline of chain supplies under Article 36a of Directive 2006/112/EC, which is also further commented on by the “Explanatory Notes on the EU VAT changes in respect of call-off stock arrangements, chain transactions and the exemption for intra-Community supplies of goods (“2020 Quick Fixes”)” published by the European Commission in December 2019, does not contain any specific limitations to the contrary.
[9] In particular, Circular No. 20/E of 2021, Reply No. 592 of December 16, 2022, and Reply No. 203 of February 2023.
Let’s Talk
For a deeper discussion, please contact:
Contact Davide Accorsi – Director, PwC TLS Avvocati e Commercialisti
Contact Stefano Luigi Airaghi – Senior Manager, PwC TLS Avvocati e Commercialisti