Duty-free Status
Livigno enjoys a special tax status as a duty-free area. Italian VAT (Value Added Tax) is not paid. Although tax advantages for Livigno were recorded as far back as the sixteenth century, the current tax exemption was first introduced by the Austrian Empire around 1840. It was then confirmed by the Kingdom of Italy around 1910, then by the Italian Republic and the European Economic Community in 1960. Although no VAT is paid, income taxes are, thus Livigno cannot be considered as a tax haven.
The justification for such a status is the difficulty in reaching Livigno during winter, and the centuries-long history of poverty in the region. The various states wanted to ensure people would have an incentive to live in the area (so that they could claim it territorially). At the same time, the tax revenue from Livigno would have been negligible.
Today, only three roads lead to the town, two from Switzerland, through the Forcola di Livigno (2,315 m, open in summer only) and the Munt La Schera tunnel, and one from Italy, through the Foscagno Pass (2,291 m). Given the increase in wealth in recent decades, the improvement of roads and the widespread availability of cars, many outsiders see this exemption as an unjustified privilege, although it sustains several hundred jobs.
Leaving Livigno into the rest of Italy on the road there is a custom checkpoint manned by Guardia di Finanza militaries. Entering or leaving from Switzerland there is both Guardia di Finanza militaries and Swiss Border Guards.
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