Tax Free mistakes in Italy: risks and remedies for retailers

What are the risks if Tax Free is managed incorrectly?

Managing Tax Free incorrectly can leave a retailer without the documentation needed to apply VAT relief. With direct relief, failure to return the customs-validated invoice within the deadline requires the transaction to be regularised. With a delayed refund, the customer has already paid VAT, and the refund depends on meeting the required conditions. Any penalties are neither automatic nor the same in every case: they depend on the violation and the circumstances.

Check the customer before applying Tax Free

The scheme applies to goods for personal or family use purchased by people who are resident or domiciled outside the EU. The value must exceed €70 per invoice, including VAT. Citizenship alone is not enough to establish eligibility.

If a requirement cannot be verified, do not apply the relief based on assumptions. Check the customer’s document and ask your tax adviser how to handle the transaction. The requirements are described by the

Italian Customs and Monopolies Agency, OTELLO.

Correct invoice details and verify submission to OTELLO

An incorrect passport number, incomplete details or a failed submission can prevent validation. Tax Free invoices are electronic: OTELLO generates a request code that must appear on the copy given to the customer. A request code confirms that the invoice was submitted; it is not the same as customs validation.

If you identify an error, keep the sales records and contact your system provider and tax adviser promptly to determine the appropriate correction procedure. Do not create a second invoice without checking how to handle the first. The

ADM OTELLO procedure explains the request code and how to check validation status.

Do not confuse the goods-export and invoice-return deadlines

For transactions governed by the 2026 rules, there are two separate deadlines:

• Goods leaving the EU: by the end of the third month following the month of the transaction.
• Return of the validated invoice to the retailer: by the sixth month following the transaction, according to the applicable procedure.

The

2026 Budget Law, Article 1, paragraph 935 extended the documentation deadline from four to six months. It did not extend the deadline for taking the goods out of the EU.

If the traveller leaves the EU through Italy, validation is handled digitally through OTELLO. If they leave through another EU member state, check with your provider and tax adviser what proof of exit is required and how it must be obtained.

If validation is missing, the remedy depends on the method used

Direct relief. The customer buys without paying VAT at the time of sale. If the validated invoice is not returned within the applicable deadline, the retailer must regularise the transaction for VAT purposes within one month of that deadline, as provided by

Article 38-quater of Presidential Decree 633/1972, in force in 2026. Involve your tax adviser promptly to check the documents, deadlines and adjustment procedure.

Delayed refund. The customer pays VAT at the time of purchase. The right to a refund depends, among other conditions, on proof that the goods left the EU and the return of the validated invoice within the deadlines set out in Article 38-quater. If proof is missing, review the case before issuing a refund or promising that it will be automatic.

Do not apply a generic penalty percentage to every incomplete transaction: your adviser must assess the type of error, any tax due and the available ways to regularise it. For a broader overview, see

STAMP’s guide to Tax Free in Italy for retailers.

What changes with STAMP Real Tax Free

With Real Tax Free, STAMP handles the transaction and assesses the risk. STAMP guarantees the retailer payment of the VAT-equivalent amount for every Real Tax Free transaction, even if the traveller does not complete customs validation. If STAMP cannot collect the amount from the traveller, STAMP covers it.

The payment guarantee does not replace tax obligations: the retailer issues the invoice, and the traveller must complete customs validation. If a transaction remains incomplete, the retailer must still check the applicable obligations with their tax adviser. Learn

how Real Tax Free works.

This guide is for information only, refers to the 2026 rules and does not replace tax or legal advice. For transactions before or after 2026, check the rules applicable on the date of sale.

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