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Hand hydroalcoholic gels and VAT

Not all hand hydroalcoholic gels are alike, not even from a tax point of view. Not all of them can, in fact, benefit from the VAT tax relief provided for by the Budget Decree.

Article 124 of Law Decree 19 May 2020 no. 34, enacted into Law 17 July 2020 no. 77 provides for a transitory VAT exemption, from 19 May 2020 to 31 December 2020, for some goods used during the health emergency determined by the pandemic. As of 1 January 2021, a 5% VAT will apply for these goods.

The categories of goods that can benefit of such tax relief also include “hand disinfecting detergents” and “hydroalcoholic solutions in litres”. Custom goods classification codes were also associated to these categories. Therefore, many companies wondered if alcoholic gels sold as hand hygienizing products are included in one of these two categories.
In particular, a company submitted a written request to the Revenue Agency.

The problem of interpretation highlighted by this company arises from the fact that the classifications of detergents and disinfectants refer to different regulations and functions. Moreover, only for products classified as disinfectants, an authorisation is required as PMC (Presidi Medico Chirurgici, medical surgical aids) or biocide from the Ministry of Health.

Examining the category “hydroalcoholic solutions in litres”, indicated in the Budget Decree, it is difficult to include the hydroalcoholic gels for hand cleaning in it, as these products do not meet the features provided for their corresponding codes identified by the Customs and Monopoly Agency, also with reference to the pack size.

The company believes that the conditions exist to classify all hand hydroalcoholic gel products as disinfectants and not as mere detergents, and therefore they consider them as belonging to the category “hand disinfecting detergents”, only including hand products with disinfectant properties, and therefore either PMC or biocides authorised by the Authorities. In fact, the tax relief does not apply to those products with cosmetic purpose or to detergents removing dirt but with no disinfecting action.

The category “hydroalcoholic solutions in litres” includes alcohol-containing disinfectants duly authorised with an ethanol concentration no less than 70%, regardless the pack size.
Therefore, only hand hydroalcoholic gels registered as PMC with virucidal action can benefit from the VAT tax relief; whereas hygienizing gel classified and marketed as cosmetics are excluded.

Written by: Federica Montozzi

Foto di xaviervandeputte0 da Pixabay