Italy Tax Agency Clarifies VAT Treatment of Intra-Community Supplies of Goods

The Italian Revenue Agency March 4 issued Letter No. 65/2026, clarifying the VAT treatment of intra-community supplies of goods. The taxpayer, a manufacturing company, manufactured steam generators for another group company for a price paid through intermediate milestones. The taxpayer issued non-taxable invoices under Legislative Decree No. 331/1993, for payments linked to intermediate milestones, despite the goods remaining at its Italian plant to be further assembled before being transported to another member country upon completion. The taxpayer sought clarification on the VAT treatment of such milestone-based supplies. Upon review, the Tax Agency clarified that: 1) milestone payments constitute advance payments ...