Direct and Immediate Link Required for VAT Deduction on Imported Goods

• The Italian Revenue Agency addressed conditions for VAT deduction rights for importers who are not owners of the goods.
• The case involves a national taxpayer importing active ingredients for processing into pharmaceuticals.
• The finished product is sold to a non-EU client, shipped to Brazil or Germany.
• The legitimacy of VAT deduction is questioned since the importer does not own the active ingredient but can use it as if they were the owner.
• The European Court of Justice has stated that a direct and immediate link between upstream and downstream operations is required for VAT deduction rights.
• VAT deduction is not granted to transporters who are neither importers nor owners of goods.
• The Court clarified that importers without ownership or incorporation of import costs into downstream prices are not entitled to VAT deduction.
• National practice concludes that ownership is not necessary for VAT deduction if goods are directly related to business activities and recorded in the purchase register.

Source: eutekne.info

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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