The company ALFA, a Brazilian multinational group specialized in the development and production of engineered cast iron components, plans to establish a business in Italy related to the automotive sector. They have set up a branch in Italy, ALFA IT, to handle activities such as account management, logistics, technical support, and quality control. ALFA IT will be involved in purchasing goods and services, as well as selling goods to Italian and EU customers. The company seeks clarification on the VAT implications, including input VAT recovery and VAT obligations for importations, intracommunity acquisitions, and domestic and intracommunity sales.
The Italian Revenue Agency states that the Italian branch of a foreign resident subject is liable for VAT in Italy for the operations it performs. However, if the branch does not participate in the transactions, the foreign subject may not be considered liable. The involvement of the branch must be evaluated on a case-by-case basis, considering its role in the specific operations. In this case, the agency concludes that the branch, ALFA IT, plays a significant role in various aspects of the operations, including customer management, inventory management, logistics, invoicing, technical support, and quality control. Therefore, ALFA IT can be considered the liable party for VAT purposes. The agency confirms that ALFA IT can recover input VAT on purchases and should charge Italian VAT on domestic sales while issuing VAT-exempt invoices for intra-community sales.
Source: agenziaentrate.gov.it
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