Becoming a regular exporter and working out the ceiling

A plastics manufacturer near Brescia closed 2025 with 2,000,000 € of VAT turnover, 900,000 € of it from exports. Every year it buys 600,000 € of materials and pays its suppliers 132,000 € of VAT, which it never recovers by charging foreign customers. The credit piles up and waits for a refund. There is a lawful way never to advance that money in the first place.

Why the ceiling exists

A business that sells mostly abroad is in an awkward position. On exports and on sales to other Member States it charges no VAT, because those supplies are not taxable. On its purchases, however, it pays VAT like anyone else. Its periodic returns therefore lean permanently towards a credit.

A recurring VAT credit is money tied up. The business advances it to suppliers, carries it forward from one period to the next and, if it has no liabilities to offset, must claim a refund, with all the time and checks that involves. For an exporter working on thin margins, that sum weighs on cash every month.

The law answers with an option. Article 8, first paragraph, letter c) of the VAT decree makes non-taxable the goods and services supplied to anyone who, having made exports or intra-community transactions, chooses to buy without paying the tax. The supplier charges no VAT, and the credit never builds up.

The option has a quantitative limit, though, and that limit is the ceiling, the plafond. You cannot buy tax-free for any amount, only up to a figure tied to exports already made. The underlying idea is that a business may avoid tax on its purchases only to the extent that it has shown it really sells outside Italy.

The ceiling does not affect sales in Italy. Goods and services the exporter supplies to Italian customers stay taxable, with ordinary VAT charged on the invoice and paid over in the periodic returns. The option works only on the purchasing side, and that is where it has its effect on cash.

The ten per cent test

Having exported something is not enough to use the ceiling. Article 1 of Decree-Law 746 of 1983 sets a condition: exports made and recorded in the previous year must exceed ten per cent of VAT turnover. It is this ratio that turns a business into a regular exporter.

VAT turnover, according to the Revenue Agency's page, is the sum of the taxable amounts of the goods and services a business supplies, records or must record in a calendar year, including zero-rated and exempt supplies. Exports therefore sit both in the numerator and in the denominator of the ratio.

For this test, however, turnover is calculated leaving out two items. The first is goods in transit or held in places under customs supervision. The second is the transactions in article 21, paragraph 6-bis, of the VAT decree: supplies outside the Italian scope, invoiced under the reverse charge or as outside the scope.

The numerator counts, first of all, the exports in letters a) and b) of article 8: those handled by the seller and those taken out of the EU by a non-resident buyer. Article 41 of Decree-Law 331 of 1993 adds a piece that matters to many small businesses: intra-community supplies count both towards the percentage and towards the limits.

In practice, then, a business that sells heavily in Germany and France, without exporting outside the EU at all, can become a regular exporter on the strength of its intra-community supplies alone. Many owners miss this, because they link the word exporter with shipments to distant countries.

The test is run again every year. A business above the threshold in 2025 can drop below it in 2026 if foreign sales fall or domestic sales grow. In that case it loses regular exporter status in 2027, even though it keeps exporting.

The rule speaks of supplies made and recorded in the previous year. The starting point is therefore the VAT books: the sales ledger, where article 47 of Decree-Law 331 requires intra-community supplies to be entered separately. Untidy books make uncertain the very figure that decides whether the business can buy tax-free.

Go back to the Brescia manufacturer from the opening story. Its 2025 exports are worth 900,000 € against turnover of 2,000,000 €, that is forty-five per cent, well above the threshold. In 2026 it can buy without VAT up to 900,000 €, and its 600,000 € of annual purchases fit comfortably inside that figure.

The 132,000 € credit that used to build up every year no longer arises. The business advances no tax to suppliers, carries no credit from return to return and waits for no refund. This is a cash effect, not a tax saving: the VAT not paid on purchases was never a cost, only an advance.

It is a ratio, not an absolute amount. A craft workshop with 50,000 € of turnover and 8,000 € of foreign sales stands at sixteen per cent and passes. A manufacturer with 500,000 € of exports on 6,000,000 € of turnover stays below, at just over eight per cent.

Fixed ceiling and rolling ceiling

Once the test is passed, you still need to know how much you can buy without tax. Article 8 sets the ordinary limit: tax-free purchases are allowed up to the total value of exports made during the previous calendar year. This is known as the fixed, or annual, ceiling.

The fixed ceiling is easy to run. At the start of the year the business knows the figure available, shares it among its suppliers and uses it up as it buys. Its weakness is rigidity: a business whose exports grow during the year cannot take advantage of that growth until the following year.

Decree-Law 746 therefore provides an alternative. Taxpayers may take as their reference amount, in each month, the exports made in the previous twelve months, provided that over that rolling period too exports exceed ten per cent of turnover worked out the same way. This is the rolling, or monthly, ceiling.

The rolling ceiling follows the real trend of foreign sales, but it needs a fresh calculation every month and continuous monitoring of the percentage. The decree excludes businesses that started trading less than twelve months ago: for a newcomer, a rolling twelve-month period simply does not exist yet.

Choosing between the two methods is a management decision more than a tax one. A business with steady exports usually prefers the simplicity of the fixed ceiling. A business growing fast abroad may gain a few extra months of tax-free buying from the rolling ceiling, at the price of closer monitoring.

What can be bought without VAT

Letter c) of article 8 covers goods and services supplied to the regular exporter, including through agents, as well as imports. The scope is broad: raw materials, components, capital equipment, transport services, consultancy.

The text does set one explicit exclusion: the option applies to goods other than buildings and building land. A regular exporter buying a warehouse, or a plot to build one on, pays VAT like any other buyer, however much ceiling it has left.

• Allowed: movable goods bought in Italy, including capital equipment
• Allowed: services supplied to the exporter
• Allowed: imports, with the declaration's receipt number shown in the customs declaration
• Excluded: buildings and building land
• Always: within the ceiling still available

The ceiling belongs to the exporter, not to its suppliers. The exporter decides how to share it out, which suppliers to ask for tax-free invoices and for what amounts. The second module shows the tool used to do this, the declaration of intent, and the checks that go with each supply.

An option is not a duty. A regular exporter can keep buying with VAT from some suppliers, for instance for small purchases, and use the ceiling only for the larger ones. It pays to use it when the credit that would otherwise arise is steady and a refund would take time.

All of this applies only to businesses that pass the test. One that exports little compared with its overall trade has no ceiling and keeps paying VAT on purchases; any credit it builds follows the ordinary routes of offsetting or refund. The ceiling is not a right of anyone who exports, but of those who export regularly.

The ceiling when a business is leased

The ceiling comes from a business's exports, so when that business passes to someone else the question is whether the benefit follows it. For the lease of a business, article 8 gives a precise answer: the transfer of the benefit takes effect only if two conditions are met.

First, the transfer must be expressly provided for in the lease contract. Second, the local VAT office must be told by registered letter within thirty days. Without the clause, or without the letter, the tenant does not inherit the ceiling the business has built up.

Anyone taking over a business in another way, for example by buying it, should look at their own case just as carefully. The text read for this course deals expressly with leases; for other forms of transfer the course has not read a rule and does not suggest one.

Where these rules come from, and for how long

Article 8 of the VAT decree, article 1 of Decree-Law 746 and article 41 of Decree-Law 331 were read in the Official Gazette. For each of them, the version after the one cited contains no text any more, only a note that it has been repealed by Legislative Decree 10 of 2026, the consolidated VAT code.

Article 171 of the consolidated code sets 1 January 2027 as its start date. The 2026 ceiling is therefore worked out with the rules described in this module. For 2027 the same concepts will have to be looked up in the new code, which this course neither summarises nor anticipates.