obligation of maintaining it for three years) and a flat-rate scheme. The latter is applicable when the operator doesn’t opt for the ordinary scheme and foresee that VAT paid on purchases and on imports is not deducted analytically but to the extent equal to the amount resulting from its application, to taxable amount resulting from the sales of the of the agricultural products, of compensation percentages, determined by special ministerial decrees, for groups of products. Therefore, farmers apply the normal VAT rates on the sale of their products but subsequently rectify the tax deduction, which may be lower than or equal to the rate applied. For example – with regard to what is relevant to note here –: • for olive oil, mushrooms and cheese it is foreseen the application of a 4% tax rate and it is allowed the same a flat rate deduction of 4%, thus the producer basically no pays tax; • instead, for wine it is foreseen the application of a 22% tax rate but it is allowed a flat rate deduction (net of the compensation percentage applied) of 12,3%, thus the producer basically pays a 9,7% tax; • finally, for truffles10 it is foreseen the application of a 5% tax rate for “fresh or chilled truffles” and 10% for “frozen, dried or preserved truffles immersed in salt water, sulphurised or with other substances added to ensure temporary preservation, but not prepared for immediate consumption”11, but the applicable compensation percentages have not yet been set by ministerial decree (so there is currently no tax deduction). Near this model, Italian legislation take in account others provisions which have the effect to facilitate agricultural taxation: 1. the main one is governed by the sixth paragraph of art. 34 of DPR 633/72, under which agricultural farmers who have in the previ10 Only in 2019 (as a result of paragraph 698, Article 1 of the 2019 Budget Law) truffles were included in Table A, Part I, which lists the agricultural and fishery products covered by the special regime for agricultural producers referred to in Article 34. In particular, a number 15-bis was added, which included in the aforementioned list “truffles, within the limits of the standard production quantities determined by decree of the Ministry of Agricultural, Food, Forestry and Tourism Policies, issued in agreement with the Ministry of Economy and Finance”. 11 These rates were amended again in 2019, thus completing the process of alignment with the rates applied by other Member States. Before 2016 (the reference is to Community Law 2016; Law No. 122 of July 7, 2016, Art. 29) in Italy the rate was 22%; instead, for example, in Spain and France, which are the main competitors of Italian producers, the rate was 4% and 5.5% respectively. This had encouraged the continuation of evasive and elusive practices, as, with VAT at 22%, Italian truffles were often sold as made in Bulgaria or made in Romania. (see the conclusions reached by Prof. Enrico Vidale and Dr. Riccardo Da Re and Dr. Giulia Corradini within the Star-Tree working group, Department of Land and Agroforestry Systems, University of Padua). Also for these reasons, in 2015, the European Commission initiated EU Pilot procedure 8123/15/TAXU, requesting Italy to amend its legislation in order to combat market distortions and bring truffle taxation into line with other European countries. 528 PAOLA MILIOTO
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