How do I charge VAT on my invoice to Non- Italian B2C consumers?
If you make distance sales from an inventory in Italy to B2C consumers in other EU countries (example: sell from Italy to another EU country), and do not already have a VAT registration in the ship-to country, you are required to charge Italian VAT. In these circumstances you must charge and account for VAT using the same method as for domestic sales (see above section). Please note that you must always issue an Italian VAT compliant invoice for distance sales from Italy which are subject to Italian VAT.
However, if you exceed the distance-selling threshold in another EU country you will be required to register for VAT in that country. This means you should no longer charge Italian VAT on these types of sales into that country, instead you should charge the VAT of the ship-to country. For example, if you store goods in Germany and start selling those goods to B2C consumers in Italy you must charge German VAT. As soon as it is clear, you will exceed the distance selling threshold in Italy you must submit an Italian VAT registration application to the Italian tax authorities and you will be required to charge Italian VAT on B2C sales to Italy (i.e. issue Italian VAT invoices and submit Italian VAT returns).
Under distance selling, you can also opt to tax your sales in the ship-to country (before you exceed the distance selling threshold). As soon as such option has been made, VAT of the destination country needs to be collected and that country’s invoice requirements will apply.
If you store goods in the consumer’s EU country prior to the sale this is not considered to be distance selling. For example, if you sell to Italian consumers and supply those consumers with goods that are already stored in Italy you will be making a domestic sale in Italy and will need to consider your VAT registration position in Italy.
How do I charge VAT on my invoice to Non-Italian B2B customers in other EU countries?
If you sell to B2B customers in another EU country, you are not required to charge VAT if a number of conditions are met. In Italy, these conditions, as set out on the Tax Authority’s website, are as follows (few exceptions could be applicable, please check):
- A supply from Italy to a customer in another EU country is liable to the zero rate where:
- You obtain, retain in your records and show on your VAT sales invoice your customers’ EU VAT registration number, including the 2-letter country prefix code, and
- The goods are sent or transported out of Italy to a destination in another EU country, and
- You obtain and keep valid commercial evidence that the goods have been removed from Italy
There are a number of other conditions which must be met, for example, additional specific invoicing requirements, and therefore we recommend you consult a tax advisor prior to making sales to B2B customers in another EU country.
There is also a requirement to submit further supporting documents such as an EC Sales List (periodic report to be submitted to Tax Authority, listing total EU cross border sales from Italy to VAT registered customers in other EU country).
What is the process for claiming Italian VAT back?
Once you are VAT registered, if you incur Italian VAT which relates to your business activities you can recover this VAT by way of your VAT return, i.e. the VAT incurred on your purchases/costs can be offset against the VAT due on your sales. VAT incurred on costs is called input VAT. It is possible to recover input VAT outside of the Italian VAT return process if you do not have a place of business in Italy and are not required to be registered in Italy. If this applies to you, we recommend that you consult a tax advisor for more details on the formalities to be fulfilled.
What are the VAT rates in Italy?
If you sell goods in Italy the VAT rate applicable can vary depending on the type of goods you sell. At present, the VAT rates applicable are either 22%, 10%, or 4%. In case you sell goods in Italy to Italy based B2B customers, and your business is not established in Italy, you are not allowed to charge Italian VAT on your sales invoices to these customers. In such a case, the customer will need to self-assess the Italian VAT due in its periodic VAT returns.
Please consult your tax advisor if you are uncertain on which VAT rate(s) to apply on your products.
I sell products into an EU country from outside EU (I do not have a business establishment in EU) and I do not store goods in EU). Do I need to register for VAT?
If you import goods into the EU for onward sale you will generally be required to pay import VAT (and possibly import duty) to the tax authority where the goods are imported. Please note you will be required to register for VAT if you store goods in an EU country. There are many ways to structure and pay import VAT, if you require more detailed advice we recommend you consult with a tax advisor with experience of VAT.
Tip: When selling in multiple Amazon European marketplaces, keep in mind that you may be liable to pay VAT to different EU countries and so may need to apply for different VAT numbers with different countries. Consult your tax advisor to help you understand your VAT obligations in the EU.
Although my company is located outside EU, for my business operations I store goods in Italy and only sell to Italy based customers. Do I need to register for VAT in Italy?
If you store goods in Italy, sell and move these goods to Italy based consumers, you are required to VAT register in Italy immediately (from the moment the goods enter Italy). Please note that an overseas (non-EU) business may also be required to appoint an Italian tax representative. Similarly, if you store goods in any other EU country you will be required to VAT register in that country as well.
Although my company is located outside EU, I store goods in Italy and sell to non- Italy based customers. Do I need to register for VAT in Italy?
If you store goods in Italy, sell and move these goods to non- Italy based customers, you are required to VAT register immediately. Please note that an overseas (non-EU) business may also be required to appoint a Italian tax representative. Additionally, if you store goods in Italy, sell and move these goods to private individuals in other EU countries (often referred to as distance selling) you may also be required to register for VAT in the EU country where the goods are received.
Although my company is located outside EU and I do not store goods in Italy, I sell them directly to Italy-based customers, shipping from an outside EU location. Do I need to register for VAT in Italy?
If you import goods into the EU for onward sale you will generally be required to pay import VAT (and possibly import duty) to the tax authority where the goods are imported. There are many ways to structure and pay import VAT, if you require more detailed advice we recommend you consult with a tax advisor with experience of Italian VAT.
I sell products from an EU country into another EU country. Where do I need to register for VAT?
If you are required to issue a French VAT invoice it must legally hold a minimum level of information. This information is as follows:Tip: When selling in multiple Amazon European marketplaces, keep in mind that you may be liable to pay VAT to different EU countries and so may need to apply for different VAT numbers with different countries. Consult your tax advisor to help you understand your VAT obligations in the EU.
My business address is in Italy and I sell goods to Italy based customers? Do I need to register for VAT in Italy?
If you store goods in Italy and only sell those goods to Italy based customers, you are required to VAT register once your sales exceed the Italian VAT registration threshold. If you want to find out more about the VAT thresholds applicable in your case,
please consult the Italian Tax Authority’s website here.If additionally you sell and move these goods to consumers in another EU country (often referred to as distance selling) you may also be required to register for VAT in the EU country where the goods are received.
My business address is in another EU country but I sell goods to Italy based customers. Do I need to register for VAT in Italy?
If you store goods in another EU country, sell and move these goods to private individuals based in Italy you will be required to VAT register in Italy if you exceed the Italian distance selling threshold. Also in case you store goods in another EU country and move your own goods to a storage location in Italy (either by your own means or by way of Amazon) there may be a requirement to register for VAT in Italy.