Probable extension of the so-called “Zero Rate” on anti-Covid-19 goods

In the Official Journal of the European Union, L 359 of 29 October, EU Decision No 1573/2020 of 28 October was published, in which the Commission considered it necessary to extend the temporal effect to 30 April 2021 of exemption from customs duties and VAT on imports of goods intended for the containment and management of the covid-19 health emergency.

In order to combat the spread of the epidemic, the Law Decree so-called “Decreto Rilancio” provided, on a transitional period until 31st December 2020, for a special VAT exemption scheme which does not affect the right to deduct for intra-Community supplies, imports and purchases of masks and other medical and personal protective equipment. From 1 January 2021, however, these transactions will be subject to the 5% VAT rate.

Following the recent EU decision, it is therefore desirable that, even within national borders, the legislator should decide to follow the direction taken in the EU and extend the regime introduced by Art. 124 of the Relaunch Decree.

It should be noted that, in the absence of burdensomeness, the transitional exemption regime with the right to deduct, as well as the taxable amount regime with a rate of 5% which will enter into force from 1 January 2021, presupposes that the goods sold free of charge fall within the company’s own business.

As a rule, the deduction is allowed only for goods sold free of charge with a unit cost not exceeding 50 euros, but as a result of the provision of the Cura Italia decree the deduction can also be exercised for goods with a unit cost of more than 50 euros, if the free transfer is intended for the State, regions, local territorial authorities and other bodies identified by the legislator. Through this provision, the objective assumption of tax, pursuant to Art. 2, paragraph 2, n. 4), of D.P.R. n. 633/1972, is satisfied regardless of the unit value of the goods, less than or greater than 50 euros, thus legitimizing the deduction “upstream” of the tax.

The Agency also intervened on this issue, stating that, until 31 December 2020, such free divestitures are exempt without prejudice to the right to deduct from the transferee. From 1st January 2021, those supplies will instead be subject to the ordinary exemption regime referred to in art. 10, paragraph 1, n. 12), of D.P.R. n. 633/1972, which implies the indetibility of “upstream” VAT.