The Author of the Article
To keep in mind
- In the case of an intra-Community supply, when the buyer collects the goods himself in Italy, he must provide the seller with proof that the goods have arrived at their destination within 90 days. Failure to do so may result in a fine of 50% of the VAT due.
- Sellers must update their terms and conditions of sale to indicate this obligation and the consequences of non-compliance.
- It is unclear whether this measure complies with the European Directive.
A supply of goods to another country is exempt from VAT
A company selling goods to another European country as part of a B2B relationship makes an intra-Community supply that is exempt from VAT. As a result, it must issue a VAT-free invoice to its customer.
This exemption from VAT is, however, subject to certain conditions, in particular the possession of proof of transport, such as the CMR.
When the seller manages the transport itself, there is generally no problem. On the other hand, when the sale is made under the EX Works or departure from plant incoterm and the buyer handles the transport, care must be taken, as VAT exemption then becomes a risk.
Introduction of a maximum period of 3 months for intra-Community deliveries
Italy changed the rules on this subject in 2024 (decree 87/2024 of 28 June 2024).
When the customer collects the goods himself and transports them to another European country, the seller must now obtain proof that the goods have arrived in the country of destination within 90 days of the goods being made available in Italy. Failure to do so will result in a penalty of 50% VAT.
However, he can avoid this fine if, within 30 days of expiry of the deadline, he spontaneously corrects his invoice and pays the Italian VAT to the Treasury.
Let's take an example
An Italian company sells goods worth €100,000 to a French buyer, who takes possession of the goods directly from the Milan-based factory (EXW). If the Italian seller does not receive confirmation that the goods have been delivered to another European country within 90 days, he risks being charged a penalty of €11,000, equivalent to 50% of €22,000.
However, they can avoid this penalty if they amend their invoices to include Italian VAT for their French customers within 30 days of the end of the initial deadline.
Can the penalties be challenged?
The application of penalties obviously raises the question of the proportionality between the fault committed by the company and the actual damage caused to the State.
The debate is still raging in Belgium (witness the ECJ ruling C-418/22 Cezam against the company). In France, the Constitutional Court, in a questionable ruling, validated the principle of a 5% fine (Conseil d'État, no. 462398 of 14 June 2022). To put it another way, there are serious arguments to be made for contesting the fines all around Europe, but the game is far from won in advance.
The VAT expert's eye
Companies with a VAT number in Italy whose customers are responsible for transporting the goods should update their terms and conditions of sale to include a clause specifying that Italian VAT will be due if the proof of transport is not received by the deadline. Failure to do so could result in significant financial penalties from the Italian tax authorities or commercial problems. It is by no means certain that the customer will agree to pay the VAT claimed 4 months later.
There is also a major question to be clarified: does the imposition of a time limit for intra-Community deliveries represent an additional requirement on the part of Italy to benefit from VAT exemption, which could oppose the European Directive? A few years ago, Poland introduced a similar 90-day restriction on the taxation of intra-Community acquisitions, a decision that was subsequently overturned by the Court of Justice (Case C-895/19 of 18 March 2021).