VAT Deduction for Third-Party Goods Imports: Italian Tax Authorities’ Clarifications and Remaining Uncertainties

• Italian tax authorities confirmed importers can deduct VAT paid at customs on third-party goods.
• This applies even when importers process goods on behalf of third parties.
• The case involves a company, Alfa, processing and marketing pharmaceutical products in Italy.
• Alfa imports a production factor from China, owned by a Japanese company, Beta.
• Alfa engages a third party, Gamma, for processing and sells the final product to Beta.
• The product is shipped from Italy to Germany or outside the EU.
• The ownership of the production factor remains with the Japanese client, transferred to Alfa free of charge.
• It is unclear if the invoiced amount to Beta includes the cost of the production factor.
• EU case law requires a direct link between input and output transactions for VAT deduction.
• VAT deduction is possible even without a direct link if costs are part of general business expenses.
• Italian tax authorities align with previous guidelines on VAT deduction rights.

Source: blog.pwc-tls.it

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.

---

---