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Ruling 304: Recall and replacement of defective systems – Documentation accompanying goods and disposal/destruction procedure

The requester is seeking guidance on VAT aspects related to the recall and replacement of defective products sold between 2011 and 2013. The Italian Tax Authority has determined that the recall and replacement of the defective products is not subject to VAT because it does not constitute a taxable transaction. This is because the company is not selling a new product, but rather replacing a defective one that was previously sold. Therefore, no additional VAT should be charged to customers or dealers for the replacement products. However, the company may still be entitled to a refund of any VAT paid on the defective products that were returned and destroyed.

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