Italian tax earthquake: 400000 yuan deposit as seller's' admission ticket '?

“Pay up or leave!”

This new regulation from the Italian tax authority has completely unsettled cross-border sellers. June 13, 2025, will become a life-or-death deadline for non-EU sellers in the Italian market—if they fail to pay a VAT deposit of €50,000 (about RMB 407,000), their Italian EU tax number (VIES number) will be forcibly cancelled and their sales rights immediately frozen.

This policy acts like a “tightening spell,” not only putting small and medium-sized sellers at risk of cash flow crises, but also potentially triggering a chain reaction in European tax compliance.

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Real Money Compliance Threshold: Three-Year Freeze Minimum

Italy’s new regulation targets VAT fraud, requiring non-EU companies registering a VIES tax number through a tax representative to pay a deposit, with funds frozen for at least 36 months. The deposit threshold for tax representatives is even higher: those serving 2-9 clients must pay €30,000, while those with over 1,000 clients must pay €2 million, with a guarantee period of up to 48 months.

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This means that sellers wishing to maintain their business in Italy must pay, in one lump sum, an amount equivalent to a small company’s annual profit, and cannot access it for three years.

Even more challenging, the Italian tax authority has suspended new tax number applications. Existing sellers who do not complete the supplementary payment by June 13 (with a grace period extended to August) will have their tax numbers automatically invalidated. Sellers participating in Amazon’s Pan-European program may be forced to switch logistics routes, causing delivery costs to soar; new entrants face the dilemma of “bleeding before profiting,” causing many startup plans to be shelved.

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Domino Effect: Comprehensive Upgrade of European Tax Compliance

Italy is not alone; this “deposit storm” has already spread across Europe. Belgium requires non-EU companies to pay a €7,500 deposit when registering a tax number, Paris is piloting an “uncapped” tax representative guarantee system, and countries like Sweden and Germany are also considering similar measures. The European Commission has proposed abolishing the tax exemption for parcels under €150 and imposing a €2 “customs clearance fee” per item.

Image source: france24

The tightening trend in the global trade environment is equally fierce:

Mexico: Cancellation of the tax exemption for goods under $50, imposing 19% tariffs + 16% VAT on Chinese products;

Vietnam: Halved the tax-free threshold for express parcels from 2 million VND to 1 million (about RMB 280);

Japan: Plans to narrow the scope of import tax exemptions in 2026.

Behind the tightening policies is a regulatory counterattack against the “wild growth” of cross-border e-commerce. Over the past decade, the volume of U.S. “de minimis” parcels has surged 600%, and the EU loses over €50 billion annually to VAT fraud. Now, countries are using a combination of “deposit + tariffs” to shift compliance costs onto cross-border sellers.

Image source: Yomiuri Shimbun

Survival or Destruction? Sellers’ Dilemma

Faced with a “entry fee” of RMB 400,000, sellers are quickly splitting into camps:

Compliance camp—grit their teeth and pay the deposit, trying to seize the market left by those who exit;

Retreat camp—shift to EU countries with looser tax policies such as Spain and Poland, or switch to “remote fulfillment” models, but logistics costs soar;

Wait-and-see camp—join forces with tax representatives to file administrative lawsuits, seeking exemption from the seller deposit, but negotiations remain deadlocked.

Industry reshuffling is now inevitable. Well-funded major sellers are taking the opportunity to acquire market share, while small and medium sellers relying on “wide distribution” models may exit in batches. Platforms like Amazon and Temu also face challenges—if sellers abandon their tax numbers en masse, platform inventory turnover and commission income will be severely hit.

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“It was the worst of times, it was the best of times”

Italy’s new deposit regulation acts as a mirror, reflecting the growing pains of cross-border e-commerce as it transitions from a wild phase to maturity.

As “compliance” becomes an irreversible rule of survival, only companies that break out of price wars and focus on building brand value can stand firm in this global tax storm. The current €400,000 deposit may just be the first hurdle in a long road of upgrades.