CONSUMPTION TAXES IN CAMPIONE D’ITALIA from January 1st. 2020

  1. The European regulatory context

The Regulation (EU) 2019/474 of the European Parliament and of the Council and the EU Directive 2019/475 of the Council of February 18. 2019 provide that from January 1st. 2020 in Campione d’Italia:

  • enters the customs territory of the European Union and the scope of excise duty
  • maintains exclusion from the application of VAT

Campione d’Italia does not pay Italian VAT and does not pay Swiss VAT. In Campione d’Italia the Local Consumer Tax of Campione d’Italia (ILCC) is collected, the proceeds of which are attributed to the Municipality of Campione d’Italia. For transactions carried out from 1 January to 30 June 2020, the MEF Decree to be issued by 30 April 2020 will establish the date and the methods of payment of the ILCC.

2. Why is the ILCC a final consumption tax?

The ILCC applies only to goods and services purchased or imported for final consumption; it does not apply in the passage of goods and services between economic operators. The goods and services are intended for final consumption when they are used for personal or family needs and not for an economic activity. Economic operators established in Campione d’Italia are not discriminated against in comparison with economic operators from other countries as:

  • economic operators from other countries and the rest of Italy recover the VAT they pay to their suppliers through the deduction;
  • the economic operators of Campione d’Italia do not pay the ILCC to their suppliers and receive the goods and services from the economic operators residing in other States or in the rest of Italy without VAT;
  • in both cases, economic operators pay the tax that they have charged to their customers end consumers.

3. Does the ILCC also pay for imports?

The ILCC also applies to imports of goods from other countries, including Italy, in Campione d’Italia, in particular by end consumers (see point 4 for some exceptions).

To avoid duplication of tax, due to the application of VAT in the country of origin of the goods and to the application of the ILCC on import to Campione d’Italia, thresholds of exemption and tax-free schemes are provided, which allow do not apply the ILCC if European or Swiss VAT has already been applied, while the ILCC is applied if there is no other purchase tax.

  • The deductible thresholds and the tax free regime of the ILCC are calculated for each individual traveler for personal purchases.

In analogy with the European and Swiss federal legislation on value added tax, the ILCC does not apply to exports.

4. Does ILCC apply to transactions between economic operators (B2B)?

According to the general rule, transactions between economic operators (business to business, B2B) are not subject to ILCC.

Therefore economic operators:

  • they must charge the ILCC only to end consumers;
  • must not charge the ILCC to other economic operators who have communicated that they make purchases in the exercise of an arts or professions business;
  • they do not have to pay the ILCC for imports of goods to Campione d’Italia.

There are some exceptions:

The ILCC applies to the supply of goods and services to economic operators who carry out certain activities objectively excluded from the ILCC. Economic operators who carry out these activities excluded from the ILCC are considered themselves end consumers and, therefore, pay the ILCC to their suppliers and do not charge the ILCC to their customers.

Economic operators who carry out activities excluded from ILCC must specifically communicate this to their suppliers.

5. What are the economic activities excluded from ILCC?

The ILCC does not apply in particular to operations rendered for health, financial, social, educational, sporting purposes.

For example, the following activities are excluded from ILCC:

  • health to the person including the transport of injured and disabled people;
  • carried out in the money market, capital, insurance sector;
  • for help and social assistance;
  • carried out in the context of education, training and research;
  • cultural and sports services;
  • related to games.

6. Discipline of the ILCC

Who pays the ILCC to the Municipality of Campione d’Italia (“taxable persons”):

  • Responsible for the payment of the ILCC are companies, professionals and artists who make supplies of goods and services to Campione d ‘Italia towards final consumers;
  • In these cases the ILCC is charged to the final consumers together with the consideration for the goods and services and paid back to the Municipality;
  • In the case of imports of goods to Campione d’Italia for final consumption, the ILCC is paid directly by the final consumers.

To what extent:

  • The tax is applied according to rates aligned with those of Swiss VAT (3.7% in particular for hotel nights, including breakfast; 2.5% in particular for food, books, newspapers, medicines, other goods for daily use , 7.7% in all other cases, for example, for cars, watches, jewelry, clothes, alcohol, services). These rates are lower than those of Italian VAT (22%, 10%, 5%, 4%).

From when:

  • The ILCC applies to operations and imports carried out starting from January 1, 2020, according to methods that will be established by MEF decree to be issued by April 2020.
  • For transactions carried out in the first half of 2020, the tax will be payable no earlier than July 2020.

7. What if Mr. Rossi residing in Campione d’Italia make purchases of goods in Campione d’Italia?

Mr. Rossi buys an asset in Campione d’Italia from the shopkeeper Bianchi and pays 107.7 of which 100 is the cost of the asset and 7.7 is the ILCC.

  • Mr. Rossi must not do anything else;
  • Mr. Bianchi shopkeeper will retain 100 and pay 7.7 to the Municipality.

Mr. Rossi pays ILCC to the Bianchi shopkeeper at the same rates as Swiss VAT:

ILCC 2,5 %; 7,7% /IVA CH 2,5 %; 7,7%;

The Bianchi shopkeeper:

  • will pay the ILCC cumulatively for the operations carried out in a certain period;
  • for transactions carried out in the first half of 2020 the ILCC will be paid starting from July, in the manner that will be indicated by the MEF decree;
  • pending the issuance of the MEF decree which will establish the necessary requirements for the application of the ILCC, it must in any case keep an orderly accounting of the operations carried out and the ILCC to be paid for the first half of 2020 and document the charge of the ILCC to the final consumer through a commercial document.

8. What if Mr. Does Rossi living in Campione d’Italia make purchases of goods in Switzerland?

Mr. Rossi buys food in Switzerland; pays CHF 250, of which CHF 243.75 costs and Swiss VAT 6.25. He returns to Campione d’Italia with these goods.

Mr. Rossi:

  • on leaving Switzerland, it remains affected by Swiss VAT, because the value of the goods is below the tax refund value threshold (300 CHF);
  • arriving in Campione d’Italia does not pay the ILCC because the value of the goods falls within the import allowance (set at € 300).

Mr. Rossi buys an asset in Switzerland; pays 350 CHF, of which 324.97 cost of the property and 25.03 Swiss VAT.

In summary:

  • purchases in Switzerland ≤300CHF (= € 274.22) YES CH / NO VAT ILCC
  • purchases in Switzerland ˃300 CHF (= 274.22 €) NO VAT CH / YES ILCC (if above the import deductible of 300 €)

For those who shop every day in Switzerland there are no charges whatsoever when the limits of the import exemption are respected (up to € 300 per person).
The champion consumer does not pay duties within the duty free threshold (€ 300 per person). Above the deductible, pay the duty if due under the Customs Tariff rules, taking into account the origin of the asset.
For purchases made by private citizens, simplifications are foreseen consisting of the verbal declaration for the purposes of the liquidation and collection of the tax.

Only for purchases in excess of the import allowance, equal to € 300 per person, upon first application and pending the MEF decree which will establish the necessary requirements for the payment of the ILCC on import, Mr. Rossi keeps the commercial documents.

9. What if Mr. Does Rossi residing in Campione d’Italia make purchases of goods in Como?

Mr. Rossi buys goods in Como or in other Italian territory other than the Campione area; pays 150 €, of which 122,95 cost and 27,05 of Italian VAT.

Mr. Rossi:

  • on leaving the Italian border it remains affected by Italian VAT, because the value of the goods is below the value of the tax refund / tax free (€ 154.94);
  • entering Switzerland does not pay tax because it is a transit;
  • arriving in Campione d’Italia does not pay the ILCC because the value of the goods are included in the import allowance (€ 300).

Mr. Rossi buys an asset in Como or in another Italian territory other than the Campione area; pays 350 €, of which 286.88 cost and 63.12 Italian VAT.

In summary:

  • purchases in Como ≤154,94€ YES Italian VAT (NO tax refund/tax free) VAT CH 0% NO ILCC
  • purchases in Como >154,94 € NO Italian VAT (YES tax refund/tax free) VAT CH 0% YES ILCC (because ILCC deductible imports up to 300 €).

Mr. Rossi does not pay duties as it is goods that have already been released for free circulation in the EU territory but must carry out the following obligations:

  • purchases the goods under a tax free regime (art. 38 quater DPR 633/1972) and presents them at the last customs exit from the EU (e.g. Ponte Chiasso).

Only for purchases in excess of the deductible of € 300 per person, upon first application and pending the MEF decree which will establish the necessary requirements for the payment of the ILCC on import, Mr. Rossi keeps the commercial documents.

10. What if Mr. Does Verdi, residing in Como or Switzerland, make purchases of goods in Campione d’Italia?

Mr. Verdi, from Como or Switzerland, if he buys an asset for personal use in Campione d’Italia does not pay the ILCC as the asset is sold to a traveler leaving the territory of the municipality, provided that:

  • the asset is worth more than CHF 300;
  • Mr. Verdi proves that he is not a resident of Campione d’Italia by showing a valid document;
  • that the asset actually leaves the territory of Campione d’Italia.

The effective exit of the property from the municipal area is demonstrated with the following alternative methods:

  • verbal declaration with issue of A24 bill;
  • export bill;
  • stamping the customs on the invoice;
  • other documentation proving the import into the rest of the EU or Switzerland.

In summary:
On the property purchased in Campione d’Italia, Mr. Verdi will pay:

  • Italian VAT, if the purchase has as its destination Como or other Italian territory other than the Campione one and the cost of the goods is greater than € 300 (art. 2 DM 6 March 2009, n. 32);
  • Swiss VAT, on import into Switzerland, if the purchase is intended for Switzerland and the cost of the goods is greater than 300 CHF. In this case, the current Swiss provisions apply.

11. What if Mr. Does Rossi living in Campione d’Italia buy services in Campione d’Italia?

Mr. Rossi overnight in Campione d’Italia in the hotel of Mr. Bianchi and pays 103.7, of which 100 is the cost of accommodation, including breakfast, and 3.7 is the ILCC.

  • Mr. Rossi must not do anything else;
  • Mr. Bianchi will be held 100 and will pay 3.7 to the Municipality

Mr. Rossi gets his hair cut in Campione d’Italia by the Bianchi barber from Campione and pays 21.54, of which 20 is the cost of the cut and 1.54 is the ILCC.

  • Mr. Rossi must not do anything else;
  • Mr. Bianchi will be held 20 and will pay 1.54 to the Municipality

The same rules apply if Mr. Rossi is from Como or another different Italian territory from Campione, Switzerland or from another European or third country.

In summary:
on services Mr. Rossi pays the ILCC at the same rates as Swiss VAT:

ILCC 3,7% – 7,7% = Iva CH 3,7% -7,7%

Mr. Bianchi:

  • will pay the ILCC cumulatively for the operations carried out in a certain period;
  • for transactions carried out in the first half of 2020 the ILCC will be paid starting from July, in the manner that will be indicated by the MEF decree;
  • pending the issuance of the MEF decree which will establish the necessary requirements for the application of the ILCC, it must in any case keep an orderly accounting of the operations carried out and the ILCC to be paid for the first half of 2020 and document the charge of the ILCC to the final consumer through a commercial document.

12. What if Mr. Does Rossi living in Campione d’Italia buy a family consulting service?

In particular, the services provided to natural persons, even if at a distance, consisting of:

  • treatments and therapies;
  • marital, family and personal advice.

Therefore, the service rendered to Mr. Rossi is:

  • subject to Swiss VAT of 7.7%, if the professional is resident or established in Switzerland, unless it concerns medical treatments excluded from the scope of the tax;
  • subject to ILCC 7.7%, if the professional is resident or established in Campione d’Italia, unless it concerns medical treatments excluded from the field of application of the tax;
  • subject to 22% Italian VAT, if the professional is resident or established in Italy, unless it concerns medical treatments excluded from the scope of the tax.

13. What if Mr. Rossi residing in Campione d’Italia receives telephone service or Internet access from an operator

The services provided in IT or telecommunications matters to sampled end consumers are taxed in Campione d’Italia if the service is actually used in the territory of the Municipality.

Mr. Rossi, for the telephone and data connection service in Campione, pays the ILCC on the service from anyone rendered.

The telephone operator, Italian or Swiss:

  • will pay the ILCC cumulatively for the service provided in a specific period;
  • for the service provided in the first half of 2020 the ILCC will be paid starting from July, in the manner that will be indicated by the MEF decree;
  • pending the issuance of the MEF decree which will establish the necessary requirements for the application of the ILCC, it must in any case keep an orderly accounting of the operations carried out and the ILCC to be paid for the first half of 2020 and document the charge of the ILCC to the final consumer through a commercial document.

14. What happens if Dr. Bianchi, who carries out the activity of dentist in Campione d’Itala, purchases goods or services?

Dental activity is one of the health activities excluded from the ILCC.

Therefore, Dr. Bianchi, who has a dental office in Campione d’Italia, does not apply the ILCC to the dental care that he provides to his patient (Italian, Swiss or Champion) and, therefore, does not have to pay ILCC to the Municipality.

When Dr. Bianchi buys the dental chair he must:

  • pay the ILCC to your supplier, together with the price of the chair, if you make the purchase in Campione d’Italia;
  • pay the ILCC on import, if you make the purchase in Italy, Switzerland or in another third or European country;
  • communicate to your supplier or to customs that carries out operations excluded from ILCC.

Economic operators who carry out transactions excluded from ILCC (for which they do not charge the ILCC to final consumers) bear the economic cost of the tax, like economic operators who cannot exercise the right to deduct the VAT paid on purchases made in how much they carry out operations exempt from VAT.

15. What happens if Mr. Rossi residing in Campione d’Italia purchases heating oil (excise duty on energy products)

Mr. Rossi, residing in Campione d’Italia, supplies himself with heating oil. Mr. Rossi, if you buy diesel from an Italian supplier not resident in Campione:

  • purchases the product with excise duty already paid and to a lesser extent as provided for the Italian municipalities which are climatically disadvantaged and not methaneised according to the Italian legislation (zone E);
  • must not pay Italian or Swiss VAT (without prejudice to Swiss transit rules);
  • will pay the ILCC to the Municipality.

Mr. Rossi, if you buy diesel from a Swiss supplier:

  • must import the product;
  • the excise duty must be reduced to a limited extent as provided for the Italian municipalities which are climatically disadvantaged and not methanised according to the Italian legislation (zone E);
  • must not pay Italian or Swiss VAT (without prejudice to Swiss export rules);
  • will pay the ILCC to the Municipality. The indications already provided in points 8 and 9 apply, with the specification that

16. What if Mr. Rossi, residing in Campione d’Italia, buys other excise goods in a territory other than Campione d’ Italia?

The indications already provided in points 8 and 9 apply, with the specification that:

1)  for the purposes of exemption from value added tax and excise duty for goods imported by travelers from third countries, the quantity limits ordinarily applied to all Italians apply;

2)  for excise goods which are introduced to Campione in quantities greater than the aforementioned customs exemptions, excise duty is collected as in the rest of the territory of the European Union;

3)  for tobaccos purchased in Switzerland or other non-EU countries, Rossi can purchase up to 200 cigarettes, 100 cigarillos, 50 cigars or 250 g. smoking tobacco for crossing the border; these purchases are exempt from VAT, excise duty and duties as for the rest of the Italians.

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