Import-export Manual – International commercial transactions and tradeshows

3. INTERNATIONAL COMMERCIAL TRANSACTIONS

COUNTRY OF DESTINATION / COUNTRY OF ORIGIN OF GOODS

Italian businesses must consider two different cases:
• goods shipped to / shipped from EU Countries;
• goods shipped to / shipped from non-EU Countries.

GOODS SHIPPED TO / SHIPPED FROM EU COUNTRIES

Since 1 January 1993, a temporary procedure has been in force which provides for:
• the abolition of customs formalities in the exchange of goods among the member countries of the European Union;
• VIES (VAT Information Exchange System) and INTRASTAT systems to control the transactions;
• the principle of taxation in the Country of destination of the goods;
• the principle of origin applied to transactions with private consumers.

Registration with VIES database

Italian businesses wishing to carry out intra-community transactions (intra-community supply of goods or intra-community acquisitions of goods or services) must check that their VAT identification number (numero identificativo Iva) is registered with the VIES database, by accessing the website of the Italian Revenue Agency (Agenzia delle Entrate).

INTRASTAT obligations

The changes introduced by the Directives 2008/8/EC and 2008/117/EC and by the Italian legislation implementing these directives (Legislative Decree 18/2010) and by secondary legislation, concern the obligation to submit recapitulative statements (also for the provision of services carried out within the EU), for which, with respect to territoriality, the principle of the country of the purchaser applies.

Intra-community Supplies

The sale of goods to companies that have their offices within the EU, with the goods being shipped to another EU country, is defined as intra-community supply. Intra-community supplies must satisfy the following conditions:
• both the seller and the purchaser must be registered for VAT in their respective countries;
• the sale must be upon payment;
• the goods must be transported to another EU State;

Intra-community Acquisitions

The purchase of goods from companies that have their offices within the European Union, with the goods being shipped from another EU country, is defined as an intra-community acquisition. Intra-community acquisitions must satisfy the following conditions:
• purchase upon payment;
• transportation/shipment of the goods to Italy from another EU Country;
• the transaction is between two taxable entities/persons;

PARTECIPATION IN TRADESHOWS IN EU COUNTRIES

If an Italian business participates in a tradeshow or in a trade event, these may be one of two types:
• events after which the goods return to Italy;
• events with on-site sale;
In the case of tradeshows and trade events in which the goods are only on display, with the goods returning to Italy, the Italian business shall note the sent goods on the relevant loading/unloading register in accordance with Art. 50 paragraph 5 of the Italian Decree Law 331/1993.
In the case of products which are subject to excise duties (e.g. wine/ alcoholic beverages), the Italian business must also complete the formalities required for excise duties purposes. When returning the products subject to excise duties to Italy, these must be sent to an authorised tax warehouse in the foreign country, which will then ship the products to an authorised warehouse in Italy.
In the case of tradeshows or trade events with on-site sale, the following procedure applies:
- the sale of goods implies an obligation to register for VAT.
- the Italian business must issue an invoice for the products sold during the trade event. Such invoice must be without VAT or additional costs and it must be issued from the Italian business to the country of destination (in accordance with Art. 42 paragraph 2 sub-paragraph c of the Decree Law 331/1993 this is a non-VAT transaction);
- In the country where the tradeshow is held, if the sale is to final consumers, you must apply the VAT of that country if the sale is to taxable entities/persons, you must apply the VAT of that country or issue an invoice without VAT if the law of that country provides for the internal reverse charge mechanism.

Provision of services within the EU

For services subject to the general rule of the Country of the Purchaser, in the EU, the INTRASTAT requirements and tax formalities depend on the type of service.

GOODS SHIPPED TO FROM NON- EU COUNTRIES

Commercial transactions with non-EU Countries are divided between imports and exports. They require the fulfilment of customs formalities i.e. the declarations for export/import.
• In case of exported goods: when goods are exiting Italy, the declaration must be submitted by the Italian company, whereas when goods are entering the country of destination, the declaration must be submitted by the foreign purchaser.
• In case of imported goods: when goods are exiting the foreign country, the declaration must be submitted by the foreign supplier, whereas when the goods are entering Italy the declaration must be submitted by the Italian company.

In the EU, declarations are submitted electronically using the Single Administrative Document (SAD).
The customs office of export issues the Export Accompanying Document with the indication of the Movement Reference Number (MRN) to accompany the goods for export. Customs formalities must be fulfilled when sending or receiving goods (either upon payment or free of charge) when the consumer is an individual and when the consumer is a business.

Supply for Export

The sale of goods to companies outside the EU, with the goods being shipped outside the EU, is defined as supply for export. The operating procedure is as follows:
• the Italian business issues an invoice to the foreign customer without charging VAT (non-taxable transaction in accordance with Art. 8, paragraph 1, sub-paragraph a, of the Italian Presidential Decree 633/1972);
• the goods are declared for final export, the value is that stated on the sales invoice;
• the Italian exporting company records the invoice in the general accounts and in the VAT book (invoices issued section) ;
• the Italian company must keep a copy of all documentation as evidence of exportation (i.e. the goods have exited the customs territory of the EU).

Importation

The purchase of goods from companies that have their offices in the EU, with goods arriving from a non-EU country, is defined as an importation. Below is the operating procedure:
• goods are declared for final importation on the basis of the value of the purchase invoice and duty and VAT are paid;
• the Italian business records the foreign invoice in the general accounts and the bill of import (part 8 of the SAD) in the VAT book (purchases section) considering the VAT and counts as a credit to the tax authorities (except for non-deductible VAT).

SUMMARY

In the case of imports from non-EU countries, Italian businesses must:
• fulfil all importation formalities at the Italian customs and pay VAT on the value of the imported goods;
• recover the VAT when recording the bill of import in the VAT book for purchases (Input VAT, except for non-deductible VAT).

In the case of intra-community acquisitions of goods, the Italian businesses:
• do not have to fulfil any customs formality nor pay VAT;
• must fulfil the accounting formalities and submit the list of intra-community acquisitions.

In case of exports to non-EU countries, Italian businesses must fulfil export formalities at the Italian customs.
In the case of intra-community supplies, instead, Italian businesses must fulfil the accounting formalities and submit the list of intra-community supplies.

PARTICIPATION IN TRADESHOWS IN NON-EU COUNTRIES

If an Italian business participates in a tradeshow or a trade event in non-EU countries these may be one of two types:
• events after which the goods return to Italy;
• events with on-site sale.
In the first case, if the foreign country has signed the convention, the ATA Carnet procedure applies to the products shipped to the non-EU country. If this is not possible, use the temporary export procedure (from Italy) and the temporary import procedure (in the country of destination). The procedures will be completed once the goods have returned to Italy. In the second case, i.e. the participation in tradeshows and trade events with on-site sale, the following procedure applies:
- Italian law provides for the goods to be exported with a final export procedure (since the Carnet ATA procedure is not applicable);
- in the country of destination, depending on the law of the country, there may be obligations for the seller (the Italian business) (e.g. payment of customs duties, VAT and/or other local taxes etc.).

TRANSACTIONS WITH COUNTRIES ON THE BLACK LIST/OFF THE WHITE LIST

In accordance with the Italian Ministerial Decrees of 4 May 1999 and of 21 November 2001 of the Italian Ministry of Economy and of Finance, since 1 July 2010, it has been mandatory to report all purchases and sales of goods and services carried out with businesses from the countries on the black list or that are not on the white list.

THE AUTHORIZED ECONOMIC OPERATOR (AEO) STATUS AND SIMPLIFICATIONS WHEN DEALING WITH OTHER COUNTRIES.

The Regulations EC 648/2005 and EC 1875/2006, which have been in force since 1 January 2008 in all 27 Member States of the European Union have modified the Community Customs Code and the Implementing Provisions of the Community Customs Code concerning the issuing of AEO certificates to the applicants The economic operators involved in the international logistics chain are manufacturers, exporters, freight forwarders, warehouse-keepers, customs agents, carriers, and importers which are involved in an activity subject to customs regulations.

The AEO status is granted once the Customs Authority of the country (for Italy it is the “Agenzia delle Dogane”) has carried out an audit that certifies compliance with customs regulations and with accounting requirements; the audit also certifies financial solvency.

Becoming an AEO is an individual free choice which depends upon the operating conditions of each applicant. The AEO status grants direct and indirect benefits and advantages for all transactions involving the customs. The direct advantages include faster processing of procedures at borders, a reduced number of checks on goods and documentation, priority processing of shipments.

HI-TECH DUAL-USE PRODUCTS

Dual-use products are normally used for civil and peaceful purposes. However, due to their technical/manufacturing characteristics, they may be used for military and/or terrorist purposes. Agreements and decisions taken within international organisations such as the UN and the EU have led to the enactment of regulations that ban or subject the exportation of such goods towards certain countries to stringent controls.

Import – export Manual – International trade documents

THE MOST COMMONLY REQUESTED DOCUMENTS FOR INTERNATIONAL COMMERCIAL TRANSACTIONS

Goods are classified by sector by a precise nomenclature, which allows a single identification for duty and tax application purposes. Depending upon the type of goods, additional documents and certificates may be required by the customs for goods to enter the country of destination. Below are the documents which are commonly used when carrying out international commercial transactions:

Commercial invoice: this is issued by the seller in the language required by the country of destination of the goods and of the number of copies required. The invoice must contain the following information: the name and the full address of the exporter and of the recipient, information about the goods (description, quantity, price), the INCOTERMS, the name of the carrier/shipper, the ancillary costs (e.g. packaging and insurance), the settlement of payment method, the country of origin of the goods, and reference to the legislation concerning VAT application and exemption. Please note that the price must be expressed in the agreed currency.

Loading list: this is issued by the seller and must contain: the commercial invoice number, the number and type of packages, the description of the goods in each package, any details about the container in which the goods will be loaded.

Certificate of origin: this certificate must be requested from the territorially competent Chamber of Commerce and it certifies the non-preferential origin of the goods. However, it does not certify the exportation, although it is issued following an invoice concerning an international sale. The instructions concerning the issue of the certificate are provided by the Italian Ministry of Economic Development.

EUR1 Certificate: this certificate certifies that the goods have a EU origin, and constitutes the documentary evidence needed for the application of the preferential tariff scheme (reduced or nil duty) on the basis of bilateral agreements between the EU and some countries. In order to obtain this certificate, the exporter must submit a written application for which he is responsible.

Certificate of free sale: this certificate is required by some non-EU countries and it certifies that the goods exported by the Italian business are sold freely in Italy as well as in EU and non-EU countries. The goods must comply with the health and safety regulations in force. Moreover, the applicant should be aware that this certificate does not replace any ministerial certificate required for the type of goods exported. The certificate of free sale is issued by the territorially competent Chamber of Commerce following a request written on letterhead paper and submitted by the exporter.

ATA Carnet (Admission Temporaire /Temporary Admission): the ATA Carnet is an international customs document for the temporary exportation (in the countries adhering to the convention) of: goods for tradeshows and trade events, commercial samples and professional equipment. This document frees the holder from paying customs duties, as security, to the customs or from paying a security deposit to the customs themselves. The Carnet facilitates the movement of goods from one country to another, through the simple submission, to the customs offices of each of the countries, of the document where the goods are listed.

Transport Document: this document certifies the signing of a shipping contract between the sender and the carrier, it also constitutes evidence of acceptance, by the carrier, of goods for shipping according to the terms agreed by the parties. The main transport documents are: the sea consignment note, the air consignment note, the rail consignment note and the road consignment note.

Insurance Certificate: this document contains the conditions and clauses of the insurance contract stipulated on the goods to be moved from the sender to the recipient. With respect to the documents needed to accompany the goods to non-EU Countries, in addition to the certificate of origin, the Chamber of Commerce also issues:

• stamp and approval on export invoices/export declarations/price lists
• stamp for signature certified true of the legal representative on documents to be sent abroad.

ELECTRONIC INVOICING

Reference Regulations:
• Directive 2001/115/EC: this directive simplifies and updates invoicing procedures concerning VAT.
• Directive 2010/45/EC: this directive modifies the regulations concerning invoicing.
• Italian Legislative Decree 52/2004 implementing the 2001/115/EC Directive which simplifies and updates invoicing procedures concerning VAT.
According to such regulations, invoices that are issued and stored electronically are treated equally to paper invoices. The Italian Decree that implements the Directive provides information on the production of electronic invoices, on their integrity, on their proper transfer and storage on digital devices. In accordance with the above-mentioned Decree, electronic transmission of information is subject to an agreement with the recipient. Moreover, the electronic invoice must be a non-modifiable document, must have a precise time reference and must contain the sender’s qualified electronic signature.

The Transport Document

The transport or delivery document is a document required in accordance with the Decree of the President of the Italian Republic 472/1996. Under this Decree, it is no longer obligatory that the transportation is accompanied by a pre-numbered document. The transport or delivery document allows for differed invoicing (under section 4 of Article 21 of the Decree of the President of the Italian Republic 633/1972).

THE SINGLE ADMINISTRATIVE DOCUMENT (SAD)

The SAD is a form whose characteristics are found in EU Regulations. The document has the layout used for customs declarations for all customs procedures and destinations used by those who operate in international trade. The implementation of the SAD is regulated by the EEC Regulation 2454/93 (Provisions implementing the Community Customs Code). With respect to exiting goods, copy No. 1 of the SAD is received by the Customs Office of Export which then issues a paper copy of the Export Accompanying Document (EAD) which accompanies the goods to the customs office of exit. Through an electronic message, sent to the customs office where the declaration of export, transit, or export with transit has been submitted, this office verifies the operation via the so-called “Exit results” message. The operators who need proof of exit for VAT purposes, must check the status of the operation by entering the Movement Reference Number (MRN) into the web site of “Agenzia delle Dogane” (Italian Customs Agency).

IMPORTANT: In Italy, for VAT purposes, the only proof that the goods have left the customs territory of the Community is the exit results message which can be found on the website of the Italian customs. If the customs declaration is submitted to a non-Italian customs office, it will not be possible to check the MRN status and consequently it will be necessary to resort to the so-called alternative proof (see the statement No. 72094 of 20 May 2009 of the Italian Customs Agency).

Import-export Manual – Customs tariff and duties

THE CUSTOMS TARIFF

The customs tariff is a collection, subdivided by product sector, of tariff headings which are marked both with a code (the so-called “heading”) and with a description (designation) which correspond to the goods being traded internationally. The tariff heading is indispensable to determine the duty to be paid to the authorities in charge of goods customs clearance. The international convention in force introduced a coding system for goods, which is known as Harmonised System (HS). The HS is arranged in 21 product sections which are divided into 99 chapters and these are subdivided into headings and subheadings which are identified by a 6-digit code.

EUROPEAN COMMUNITY CUSTOMS TARIFF

In the EU, the 6 digits of the Harmonised System may be complemented by other digits which correspond to other subdivisions. In particular, there are:
• the Common External Tariff (the so-called Combined Nomenclature, CN) which groups about 9,500 headings, each of them being identified by an 8-digit code (the first 6 digits are the HS codes, while the last 2 correspond to the CN subheadings). Next to each heading, the CN indicates the autonomous duty (which is decided autonomously by the EU) and the conventional duty (as a result of international agreements signed by the EU). The CN is required in bill of exports and INTRASTAT forms (both for intra-community supplies and for intra-community acquisitions).
• the Integrated Tariff of the European Community (TARIC) which groups about 13,000 headings each of them being identified by a 10-digit code (compared to the CN, the additional 2 digits identify any preferential duties and other specific measures). For import transactions, the code referred to the goods must be of 10 digits.

THE NATIONAL TARIFF OF USE

The national tariff of use is a 14-digit code which is composed of: 6 HS digits + 2 CN digits + 2 TARIC digits + 4 additional digits. With respect to these 4 additional digits, the first 2 concern EU taxation system, VAT and excise taxes, while the remaining digits concern specific information (e.g. anti-dumping duties, reference prices for wines, products concerning endangered species of fauna and flora, goods of artistic and cultural interest, etc.). The national tariff of use is the operating manual for customs agents and can be found in the “AIDA” (Automazione Integrata Dogane Accise, Integrated Automation Customs Excises) database of the Italian Customs Agency (Agenzia delle dogane).
IMPORTANT: in case of doubts on the correct classification of goods, it is possible to obtain an official opinion from the customs authority by filling in the relevant form. The form is also found on the website of the customs authority. This form must contain a detailed description of the goods as well as their supposed classification. This request must be sent to the customs office which is competent for the territory where the company is based, or to the office where customs clearance is expected to take place.

DUTIES

In all import-export commercial transactions, a very important heading is that concerning customs duties. Customs duties are taxes which are usually expressed as a percentage of the value of goods, and they are levied on imported goods when they are released for free circulation in the customs territory of the country of destination. The duties must be paid to the customs office from which the goods enter. With the expression “release for free circulation”, we mean the completion of the customs formalities (including the payment of duties) aimed at introducing the goods into the country of destination, thereby clearing them through customs and allowing their free movement. Exceptions are taxes (VAT, excise taxes, taxes on consumption) which are due to the country of destination for the release for consumption.

With respect to Italy, depending upon the countries and the type of commercial transaction to be carried out, there are two different sources of information:
• In the case of an importation from a non-EU country, the reference source is the website AIDA On-line (a website of the Italian customs authority);
• In the case of an exportation towards a non-EU country, the official source to rely upon is the website “Market Access Database” (a website of the European Commission).