June 30, 2023
From 01 January 2021, the UK is officially out of the EU and significant adjustments are now required since the UK’s trading with Italy/EU now implies importing and exporting operations. In general, VAT will have to be paid in the EU country where goods are imported from the UK; all goods exported to the UK will be exempt from VAT in the EU, but then the VAT rules applicable to imports into the UK will have to be complied with.
From 01 January 2021, UK VATregistered businesses importing goods B2B into the UK will be able to avail of Postponed VAT Accounting (PVA) and account for import VAT on their VAT return (much like the Reverse Charge), rather than paying import VAT on or soon after the time that the goods arrive at the UK border; but this is all subject to meeting conditions. Accordingly, that operation in Italy qualifies as an export supply, not taxable for VAT purposes.
From 01 January 2021, VAT on imported goods from outside the UK with a value up to GBP 135 is collected at the B2C point of sale not the point of importation. This means that UK supply VAT, rather than import VAT, will be due on these consignments. Imports from outside the UK over GBP 135 will be treated as imports subject to import VAT (but PVA may apply) and again, output VAT is due on their sale.
UK VAT-registered business exporting goods to Italy will treat the goods entering the EU the same as those entering from other non-EU countries, which means that UK VAT is at the zero-rate and import VAT and any other custom duties are due when the goods arrive in the EU.
UK business which sell B2C to Italy need to register for EU VAT and appoint fiscal representatives. Alternatively, they can be directly identified to fulfil the obligations and exercise the rights regarding VAT in Italy (Resolution n. 7 of Agenzia delle Entrate of 01 February 2021). They also need to retain evidence to prove that the goods have left the country, where applicable.
With regards to services, however, the rules continue to apply broadly as they did previously which means that the “place of supply” rules remain standing.
GGI member firm
Three & Partners
Accounting, Tax, Legal, Corporate Finance
Turin, Italy
T: +39 011 5808352
W: threeandpartners.com
Paolo Motto
E: motto@threeandpartners.com Paolo Motto
Three & Partners is a boutique firm based in Turin and deep-rooted in the northwest of Italy but with a clear European identity and a strong international vocation. The firm provides integrated tax, corporate, legal and business advice and assistance all over Italy on a wide range of domestic, European and international matters. Paolo Motto, Founder and Partner, is a Chartered Accountant and Statutory Auditor with considerable experience in business consulting, corporate internationalisation and business crisis management. He was a representative of the Italian Chamber of Commerce in Dubai and was a member of the International Chamber of Commerce (ICC).