Intra-community operations: let's clarify

ntra community operations let's clarify

What are intra-Community transactions?

The term "intra-community operations" refers to the exchanges between member countries of the European Union, in other words, the supply and purchase of goods and the provision, rendered and received, of services that are exchanged between VAT-taxable persons belonging to member countries of the European Union.

When an Italian operator makes a supply to EU operators, these are "non-taxable" VAT transactions. In fact, the taxation regime in the EU country of destination of the goods or services involved in the transaction is applicable to this operation.

In order to be able to speak of intra-Community operations relating to goods, the following elements must be present: 

  • Two parties: the operator carrying out the transaction and the operator receiving the transaction. These two parties must be identified for VAT purposes in the two EU territories to which they belong and be registered in the VIES database.
  • Transfer of goods: This must be for consideration and involve the transfer of ownership of the goods from the transferor to the transferee.
  • Physical movement: there must be an actual, i.e. physical, transaction of the goods from one EU territory to another territory belonging to the European Union.

From January 1, 2020, in order to ensure more effective controls, the possession of a valid VAT identification number by the taxable person or non-taxable entity to whom an intra-Community supply of goods is made has been introduced.

In particular, the supplier must check the status of the purchaser through the VIES system before issuing an invoice without the application of VAT.

The objectives of intra-EU transactions are very specific:

  • To reinforce Community harmonization.
  • To prevent VAT fraud and guarantee greater certainty in the rights of economic operators in the run-up to 2022, when the transition to the definitive VAT system will take place.

The areas of focus are the following:

  1. VAT identification number of the transferee: essential requirement in order to benefit from non-taxable VAT.
  2. Use of the simplest call of stock.
  3. Simplification of rules relating to chain sales.
  4. Proof of transportation of the community supply.

The differences between intra-Community supplies and intra-Community purchases

Intra-community supplies of goods

The intra-community supplies of goods are not taxable in Italy according to art. 41 of DL 331/1993, when:

  • They are purchases and sales for payment and the goods are transported or dispatched to the territory of another Member State by the transferor or the purchaser, or by third parties on their behalf
  • They are supplies on the basis of catalogs, by correspondence and the like, of goods that are not subject to excise duty, dispatched or transported by the assignor or on his behalf in the territory of another Member State towards assignees there not required to apply the tax on intra-Community purchases, and who have not opted for the application of the same.
  • They are supplies, with dispatch or transport from the territory of the State, in another Member State of goods intended to be installed on site, mounted or assembled by the supplier or on his behalf.

Intra-community purchases of goods

Intra-community purchases of goods, on the other hand, are subject to the Italian VAT system when they take place for consideration, between a taxable supplier in another Member State and a taxable purchaser in Italy, both registered in the VIES, with the physical introduction of the goods into Italian territory.

The invoice without tax issued by the EU supplier, for intra-EU purchases taxable in Italy and for services received, must: 

  • Be numbered and integrated by the Italian client.
  • Indicate the elements that contribute to forming the taxable base.
  • Indicate the amount of tax.

Invoices issued by the intra-EU supplier and received by the resident transferee without additional tax must be numbered, integrated and recorded separately in the sales register and, at the same time, in the purchase register, by the 15th day of the month following receipt, with reference to the previous month (pursuant to articles 46 and 47 of Legislative Decree 331/93).

On the other hand, general services supplied to individuals or rendered to taxable persons for their own personal use or that of their employees (i.e. B2C relations), continue to be subject to taxation in the territory of the State if supplied by taxable persons established in Italy (the so-called criterion of the place of the supplier provided for by art. 45 of the VAT Directive).

We cannot speak of intra-Community purchases when we have the following specific cases:

  • Goods are introduced into the territory of the State, in a VAT warehouse.
  • Goods are introduced in the Italian territory for processing, repairs or usual manipulations, in case they are shipped out of the state where processing took place at the end of this process.
  • There is a temporary use of goods for the performance of services in Italy by the same person who brought them into the country.
  • Plant or machinery is purchased and installed in Italy by the supplier or by a third party on his behalf.
  • Gas is introduced into Italy through natural gas or energy systems.
  • Goods are purchased for which the supplier benefits from VAT exemption in their country of origin.