For the Constitutional Court, VAT on imports is not a duty (contrary to what Trump says)

ROME – A ruling by the Constitutional Court indirectly responds to Donald Trump and one of the accusations that the American president has leveled at European governments – including Italy –, that of imposing additional customs barriers in addition to duties on goods. Among these, Trump had also cited VAT , the value added tax, which makes up the price of a good. In addition to having completely different purposes from those of customs duties, it is a tax on consumption for which the company can request a deduction once the good has been sold. And the Constitutional Court, on a question raised by the United Sections of the Court of Cassation, clarifies the substantial difference between VAT and duty .

Why VAT is not a duty

Even if "now explicitly qualified by the legislator as a border duty, import VAT has a radically different nature from customs duties and this structure cannot be affected by the aforementioned qualification. The former, in fact, unlike the latter, is structured on the basis of the principle of fiscal neutrality with respect to all economic activities, which implies the right for the taxable person to deduct the VAT due or paid following the transfer of goods or provision of services".

Duties and equivalent measures, on the other hand, are border duties that perform very different functions, being aimed at increasing the price of specific goods with a view to protecting the economy and the internal market as well as to increasing the European Union's own resources".

The ruling then excluded the possibility of eliminating the confiscation of the object , because "in the case of evasion of VAT on importation, it would not always be possible, especially in reference to non-divisible goods, to carry out a precautionary seizure (which would remain possible, however, only for the profit, i.e. the evaded VAT, but not for the sanctions) on goods of a much higher value than the evaded VAT".

The court thus declared the constitutional illegitimacy of art. 70, first paragraph, of the presidential decree of 26 October 1972, n. 633, in relation to arts. 282 and 301 of the presidential decree of 23 January 1973, n. 43.