TAX ALERT 2021/06

The Revenue Agency, with Guideline no. 13 of 29 September 2021, states that only the actual recipient of the goods can deduct the VAT paid at customs. This conclusion  – that seems to be inspired by the order of the Court of Justice of the European Union in case C-621/19 issued on 8 October 2020, Weindel Logistik Service  –  confirms the interpretative change started with the publication of Letter Ruling 13 January 2020 no. 4 in which the Italian Revenue Agency, departing from its precedents, stated that the right to deduct VAT paid upon importation arises only in the hands of the recipient of the goods, after registering the customs bills in their VAT accounting, provided that the imported goods have an immediate and direct connection with its economic activity.

The principle expressed in this last Guideline does not seem to preclude the deductibility of VAT paid at customs in relation to importation occurring under a consignment stock agreement for which the principles expressed by the Revenue Agency in Letter Ruling 5 August 2008, no. 346 and in Letter ruling 26 July 2021, no. 509 should still be applicable. The interpretation is also in line with Letter Ruling 11 January 2019, no. 6 in which the Revenue Agency recognized the right of the lessor to deduct VAT paid at customs in the context of a financial leasing agreement since the latter can dispose of the assets as owner.

That said, Guideline no. 13 requires to verify if the right to deduct VAT paid upon importation is properly exercised with reference to certain contractual arrangements, for instance with reference to good imported in order to carry out work on behalf of third parties (e.g. toll manufacturing).