Get a break from VAT

  • Published
  • 31st Fighter Wing Judge Advocate
AVIANO AIR BASE, Italy --  Value Added Tax, also referred to as Imposta sul Valore Aggiunto in Italy, is a form of consumption tax. It is a tax on the market value added to a product or service at each stage of its manufacture or distribution. The VAT is ultimately passed on to the consumer in the price paid for the product or service. A VAT differs from a sales tax, which is only levied at the final point of purchase.

Only in extremely limited circumstances are individuals exempted from paying VAT in Italy. Article IX of the NATO Status of Forces Agreement specifically states that members of the force will not gain relief from local taxes as a result of their SOFA status. Therefore, there is no general exemption from the VAT for military members stationed in Italy. However, local Italian tax authorities allow military members a partial VAT exemption for automobile repair. Under current guidance from local fiscal authorities, this exemption can only be extended to vehicles registered with the 31st Security Forces Squadron Pass and ID office. The legal office has instructions on how to claim the VAT exemption for vehicle repairs.

Although VAT is a national tax program established by law in Italy in 1972, exemptions from VAT are determined by provincial fiscal authorities. In the Pordenone province, that responsibility belongs to the Pordenone Customs Office, which only permits military members an exemption from paying the tax on automobile repair. In other regions, such as Vicenza, members are entitled to a more robust VAT exemption program extending to additional goods and services. Unfortunately, those exemptions do not apply to members stationed at Aviano, as the Pordenone Customs office has made clear their interpretation of permissible VAT exemptions. At this time, no alternatives exist for tax free purchases for individual military members.

For more information, call the legal office at DSN 632-7843, or visit their office in building 1403.