Free ports in border areas: VAT chargeability on purchases and services

Tax ruling No 95 of March 25, 2020
There is a double condition to apply the non-taxable VAT regime on international services and the service connected to international trade provided on free ports in border areas (ports, airports, train stations).

The Italian Tax Agency released a legal opinion on an issue, asked by a service company that acts in airports free areas. The company has recently purchased some new lands and buildings in order to expand the activity in the free area, therefore, it was interested to an extended application of tax benefits.

The Agency has stated that to apply the non-taxable VAT regime, the services has to be provided in the free ports areas and must be connected to the operation or the maintenance of the structures in the areas or to the movement of goods and transports. As a result, the regime shall not be applicable to new projects and related purchases (new buildings, structures), although located in a free area.

This interpretation line confirms a previous circular and a legal opinion, both released in 2008.

According to the 2007 Italian budget act, the non-taxable VAT regime is indeed recognized to projects to be performed in ports or adjacent areas under the condition that the project had already be planned and only if connected to adaptions of existing structures.

Avv. Sara Armella (Italy)