Guide to the tax discipline for VAT purposes relating to e-commerce, direct and indirect, and to the new MOSS regime.
For electronic commerce (E-commerce) means any support activity for a commercial activity, which is carried out using the Internet telematic channel, carrying out transactions such as marketing of goods and services, online distribution of products in digital format, carrying out financial and stock exchange operations. It is, in any case, a commercial exchange that is carried out through a electronic channel purchase of goods and services, in which the customer chooses the product online. The different forms of e-commerce can concern:
Indirect e-commerce - It concerns indirect electronic commerce, concerning material goods. The seller makes available on the website the catalog of products with the product characteristics, delivery conditions and prices. The customer proceeds to place the order electronically, but receives the physical delivery of the goods. Classic examples of indirect e-commerce sites can be Amazon, E-bay, etc .;
Direct e-commerce - It concerns the electronic commerce of intangible or digitized goods in this case we speak of direct electronic commerce (on-line), in which the entire commercial transaction, including the delivery of the goods, takes place electronically.
|Customer country||Country of the Supplier||VAT regime||Statement|
|Italy||Italy (VAT or private)||Taxable transaction||Art. 2 DPR n. 633/72|
|Italy||EU country (VAT number)||Intra-Community supply||Art. 41, co. 1 letter a) DLn331 / 93|
|Italy||EU country (private)||Distance selling||Art. 41 co. 1 letter b) DLn331 / 93|
|Italy||Extra-EU country (VAT or private)||Export transfer||Art. 8 DPR n.633 / 72|
|EU country||Italy (VAT)||Intra-Community purchase||Art. 38 DL n.331 / 93|
|EU country||Italy (private)||Distance selling||Art. 40 co. 3-4 DL n.331 / 93|
|Extra EU country||Italy (VAT or private)||Import||Art. 67 Presidential Decree no. 633/72|
The VAT regulation of indirect electronic commerce operations between subjects resident in Italy, including permanent organizations in Italy of non-resident subjects, is governed by the provisions contained in Presidential Decree no. 633/72. For transactions attributable to indirect E-commerce, characterized by the material delivery of goods through traditional channels (mail, courier, etc.), the regulation of mail-order sales applies if the customer is a "private consumer". For this reason, according to Resolution no. 274 / E / 2009 of the Inland Revenue, the corresponding transactions are not subject to:
• nor to the obligation to issue the invoice, unless the same is requested by the customer no later than the time of carrying out the assignment, as required by article 22, paragraph 1, no. 1), of Presidential Decree no. 633/72;
• nor to the obligation to certify the fees by issuing the receipt or the tax receipt, since the exemption referred to in article 2 of Presidential Decree no. 696/1996.
The daily sales fees, inclusive of VAT, must, however, be noted in the appropriate register referred to in article 24 of Presidential Decree no. 633/72, by the working day following the one of execution of the operation and with reference to the day of execution. Furthermore, during the periodic liquidation of the VAT, the separation of the VAT must take place with the mathematical method (no ventilation).
The indirect e-commerce operations that take place between subjects resident in different EU countries, being equated to distance selling, follow the VAT regulation applicable to intra-community transactions (article 40, paragraphs 3 and 4 letter b) and 41, paragraph 1 letter b) of the DL n. 331/93). The following goods are excluded from the discipline of distance selling (article 41, paragraph 1 letter b) of Legislative Decree no. 331/93):
• New means of transport;
• Goods to be installed, assembled or assembled by the supplier or on his behalf;
• Products subject to excise duty.
In online sales of excise goods, shipped or transported by the transferor, the distance selling regime is not applicable. For goods subject to excise duty, the place of taxation does not depend on the condition relating to the amount of sales made in the Member State of destination, but only on the person who organizes the transport or shipment of the goods. If the latter is managed by the transferor, the VAT is due in the country of destination, while if the shipment (or transport) is handled by the non-resident transferee, the operation remains subject to VAT in Italy. The Revenue Agency with Resolution no. 39 / E / 2005, specified that "distance sales characterized not only by the fact that the purchase is completed by a private entity, but above all by the fact that the transportation of the goods sold is carried out directly by the supplier or by his bill; it follows that the sale is to be considered non-taxable even if it takes place in the same point of sale as the supplier, if the transport to destination is carried out by the supplier or on his behalf ".
In the context of intra-Community transactions, three hypotheses can generally be configured:
• Intra-community purchase in which the transferor is a community entity and the buyer is a private entity fiscally resident in Italy - VAT is applied in Italy, if the community originator made sales to Italian private individuals in the previous year o during the year, for an amount equal to or greater than €. 35,000. In this case, the EU entity is required to appoint a tax representative, or to proceed with direct identification in Italy, pursuant to article 35-ter, Presidential Decree no. 633/1972, in order to fulfill the obligations for VAT purposes towards the Italian tax authorities. Vice versa, in case of not exceeding the aforementioned limit, the EU transferor subjects the transaction to VAT in his State of residence, unless he has opted for the application of the tax in Italy;
• Intra-Community transfer in which the transferor is an Italian VAT subject and the buyer is a private consumer residing in another EU Member State - Italian VAT is applied if the amount of the transfers made in the other Member State has not exceeded in the previous calendar year, nor exceeds the € threshold in the current year. 100,000, or the threshold of any minor amount established by the State of destination of the goods. In the case in which the turnover achieved by the Italian company in the other Member State were to exceed this threshold, or for transactions below the threshold, the Italian supplier decided to opt for the application of VAT in the country of destination, the procedure to be adopted by the national operator it will be as follows: acquire a VAT position (by direct identification or appointment of a tax representative) in the State of destination of the property to detect the fictitious intra-community transfer and make the corresponding intra-community purchase; tax the transfer in the State of destination, which is territorially relevant pursuant to article 7-bis of Presidential Decree no. 633/72.
• Intra-community transfer and purchase in which the transferor and the buyer are resident in different EU countries and are both taxable persons - VAT is applied according to the rules dictated in general for intra-community purchases, with the application of the 'VAT through the reverse charge mechanism in the country of the buyer.
Extra EU operations
With regard to indirect e-commerce transactions involving goods from non-EU countries, or goods sold by Italian subjects to buyers residing in non-EU countries, the following provisions apply:
• Imports pursuant to article 67 of Presidential Decree no. 633/72 - VAT, applied in customs, in the customs bill. It will have to be fulfilled together with customs taxes;
• Exports pursuant to article 8 of Presidential Decree no. 633/72 - Issue of an invoice without application of the tax.
In practice, it is very common for shipments to take place by post. For imports of goods by post in the form of letters and parcels, they are considered to be declared to customs for release for free circulation at the time of their presentation. At customs, the consignee is considered the declarant and therefore the debtor of the customs debt on import. For imports <1,549.37, VAT and fees are anticipated by the postal administration. For imports> to €. 1,549.37, it is necessary to present a customs declaration on the SAD compliant model.
Drop Shipping has been one of the new frontiers of e-commerce for a few years and consists in the possibility of selling your products online without having a physical warehouse, thus avoiding the problem of the unsold: the seller relies on the dropshipper, who will ship directly the products to the final buyer, providing guarantee and support (usually). The online seller assumes the figure of the business agent, providing the customer in practice and adding his mark-up to the final price. For further information you can consult this article: “Drop Shipping: guide to tax legislation".
Direct electronic commerce
Direct e-commerce (direct e-commerce) is characterized by the fact that the entire commercial operation (transfer and delivery of the goods) takes place only electronically, through the supply of non-tangible virtual products. The services and goods transferred (software, websites, images, texts, databases, music, films, etc.), originally dematerialized, are in fact concretized upon arrival by the recipient (download). According to article 7, paragraph 1 of EU Regulation 282/2011 "The services provided by electronic means include the services provided through the Internet or an electronic network, the nature of which renders the service essentially automated, accompanied by minimal human intervention and impossible to ensure in the absence of information technology ". The main types of services provided by electronic means are the following: (Annex I EU regulation no. 282/2011).
• the provision of websites and web-hosting, remote management of programs and equipment;
• the supply of software and related updating;
• the supply of images, texts and information and the provision of databases;
• the supply of music, films, games, including fate or gambling, political, cultural, artistic, sporting, scientific or entertainment programs or events;
• the provision of distance teaching services.
Direct e-commerce territoriality
From 1 January 2015, following the changes introduced by article 58 of Directive no. 2006/112 / EC, by article 5 of Directive no. 2008/8 / EC, for B2C relationships, electronic, telecommunication and broadcasting services, regardless of the place of establishment of the provider, are expected to be territorially relevant in the country of the client. The aforementioned territorial changes were introduced in Italy by article 1 of Legislative Decree no. 42/2015. In particular, following article 7– sexies paragraph 1 lett. f) and g) of Presidential Decree no. 633/72, are considered subject to VAT in Italy, if rendered to customers who are not taxable persons the provision of services rendered by electronic means, when the customer is domiciled in the territory of the State or resident there without domicile abroad and the telecommunication and remote broadcasting services, when the client is domiciled in the territory of the State or resident there without domicile abroad and provided that they are used in the territory of the European Union. In light of the new territorial criterion applicable for digital services rendered in B2C relationships, letters h) and i) of article 7-septies of Presidential Decree no. 633/72, relating to the provision of digital services provided to non-EU customers, not taxable persons. Therefore, according to the new regulations, from 1 January 2015, as regards digital services, there is no longer a distinction between B2B and B2C relationships, since the transactions in question will be subject to VAT in the country of the client (VAT subject or not) regardless of the place where the provider considers himself established (EU or Extra-EU country).
At a procedural level, the methods of applying VAT will, on the other hand, be differentiated according to the status of the client (VAT subject or not), since:
• In B2B relationships, the tax will be applied by the customer with the reverse charge mechanism;
• In B2C relationships, on the other hand, the tax will be paid directly by the supplier (EU or non-EU): after identification for VAT purposes in the EU country of the client, using the special "Mini One Stop Shop" (MOSS) scheme.
Mini One Stop Shop ("MOSS")
From 1 January 2015, the special VAT regime, previously applied to electronic services provided to end consumers by providers not established in the EU, has also been extended to taxable persons identified for VAT purposes in a Member State. To reduce and simplify the tax obligations deriving from the change in the territoriality of digital services, the European legislator has provided on an optional basis a special so-called "MOSS - Mini One Stop Shop" which allows you to declare and pay the tax due for the services private European consumers wherever provided, in the country of identification only. Obviously, the application of the regime requires compliance by operators who enroll in the special MOSS regime with the billing rules and the VAT rates applied in the various EU countries. Let's now see the individual billing methods:
• Italian customer subject to VAT and EU supplier - the supplier must issue an invoice at the time of payment of the consideration (article 6, paragraph 3, Presidential Decree no. 633/72);
• Italian consumer private customer and EU supplier - based on article 22, paragraph 1, no. 6-ter of Presidential Decree no. 633/72, the invoice must not be issued unless requested by the customer by the time the transaction is carried out (i.e. payment of the consideration);
• Foreign customer subject to Italian supplier VAT - the transaction is excluded VAT in Italy (article 7-ter of Presidential Decree no. 633/72) and the billing obligation is envisaged: by the 15th of the month following the moment of the transaction, specifying the wording on the invoice "Reverse charge" if the customer is liable for tax in another EU country, or "transaction not subject" if the customer is established in a non-EU country;
• Private foreign customer, Italian supplier - the transaction is excluded by VAT in Italy. The obligations of the Italian supplier are different depending on whether the same is registered with the MOSS:
• Supplier registered in the MOSS - is exempt from billing and registration obligations for digital services rendered to customers from other EU countries;
• Supplier not enrolled in the MOSS - for customers from other EU countries, it must identify itself for VAT purposes in the various member countries of the customers.
For the operating procedures for the application of the special VAT regime of the MOSS - Mini One Stop Shop you can consult our contribution "MOSS: the regime for direct B2C ecommerce".