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What VAT applies in Italy?

Publication date: 22.10.2020

The VAT or IVA (Imposta sul Valore Aggiunto) has been in force in Italy since 1972. The basic VAT rate in Italy is 22% and covers all products and services that are not covered by the reduced rates of 10%, 5% and 4% and the zero rate.

 

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Value-added tax (PTU) is a value-added tax, which is a tax on the increase in value of goods as a result of the production process or creation of services. VAT is an indirect tax, collected at each successive stage of trade in goods or services. VAT applies to both sellers and buyers of goods and services, as its value is added to the net value of the transaction.

VAT in Italy

The VAT or IVA (Imposta sul Valore Aggiunto) has been in force in Italy since 1972. The basic VAT rate in Italy is 22% and covers all products and services that are not covered by the reduced rates of 10%, 5% and 4% and the zero rate.

VAT rates ItalyIndicated goods or services
20%All goods or services other than those indicated below
10%Certain foodstuffs, Water supply, Certain pharmaceutical products, Domestic passenger transport, Admission to cultural events, Admission to certain sporting events, Certain agricultural products, Hotel accommodation, Restaurants, Eating out, Alcoholic beverages in bars and cafes, Certain social housing, Restoration and repair of private housing, Certain construction work in new buildings, Energy products (excluding heating), Fireplace wood, Household waste collection, Flowers and cut plants for decorative purposes, Flowers and cut plants for food production
5%Some groceries, Some social services, Some passenger transport
4%Some food products, Some medical devices for the disabled, Motor vehicles for the disabled, Some books, Newspapers, Some magazines, E-books with international standard book number (ISBN), Online newspapers, TV license, Some social housing, Some agricultural products, Some social services, Construction work on new buildings (for the first apartments), Stock of new buildings (for the first apartments))
0% (zero)Intra-Community and international transport

VAT identification number in Italy

The EU VAT number in Italy consists of 11 digits with the IT prefix (Italy), e.g. IT12345678901. The first 7 digits identify the taxpayer, while the eighth and ninth correspond to the tax authority, and the last is the control number.

Italian VAT invoice requirements

VAT invoices in Italy must be issued on the day of delivery of goods and up to 15 days after the end of the month in which the delivery took place. VAT invoices in Italy must be kept for four years. VAT invoices in Italy must contain at least the following basic information:

  • Date of issue
  • Unique number
  • Supplier’s VAT number
  • Full supplier and customer addresses
  • Full description of goods or services provided
  • Details of the quantity of goods
  • Delivery date (if different from the invoice date)
  • The net value of the supply subject to taxation
  • Applied VAT rates
  • Amount of VAT broken down into rates
  • Reference to the applicable law in which VAT is not charged
  • Total gross invoice amount

In some cases, the invoice should include the details of the supplier’s tax representative. For transactions of less than EUR 100 it is possible to provide a simplified version of the invoice.

When to register for VAT in Italy

In Italy, there is no VAT threshold for the registration of non-resident economic entities. The registration must be done before the start of a taxable activity.

As in other EU countries, if the sale to Italy as part of the intra-Community distance delivery of goods exceeds EUR 10,000, the entrepreneur is obliged to settle VAT in Italy or under the VAT-OSS procedure.

All taxpayers are required to submit quarterly VAT returns (under the Comunicazione Liquidazioni Periodiche IVA) by the last day of the second month following the end of the accounting quarter. A quarterly VAT return can be made by taxpayers who in the previous year achieved a turnover of less than EUR 400,000 for companies providing services and EUR 700,000 for companies providing other economic activities.

The tax must be paid by the 16th day of the second month following each quarter. After exceeding the limits, taxpayers are obliged to settle accounts monthly. The tax must be paid by the 16th day of the second month following each quarter. The deadline for submitting annual VAT returns is 30 April of the year following that date.

Additionally, the entrepreneur should register VAT in Italy if their company:

  • Imports goods to Italy (if the customer is registered for VAT in Italy, the supplier does not have to charge Italian VAT)
  • Buys and sells goods in Italy (if the supplier and customers are not Italian companies with VAT registration – reverse charge)
  • Delivers or accepts intra-Community supplies
  • Receives goods in the form of acquisitions from other EU countries
  • Run online sales to individual customers (subject to the Italian threshold for registration of distance selling)
  • Stocks goods in a consignment warehouse in Italy for delivery in the rest of the EU
  • Charges for admission to events or exhibitions in Italy
  • Runs e-commerce transactions with Italian consumers

Penalties and VAT interest in Italy

The penalty for late payment of the Italian VAT due is the imposition of an additional 30% VAT. An interest fee of 2.5% per year is also charged. If the refund is delayed, the fines can reach over 240%!

Limit on mail-order sales in Italy

The mail-order sales limit for taxpayers in Italy is EUR 35,000.

Must read what is VAT-OSS? Changes to VAT settlements in the EU for online retailers

Intrastat in Italy

In addition to the VAT declaration, foreign companies operating in Italy may be required to report Intrastat statistics. It contains information on the import or export of goods between countries belonging to the European Community as well as the movement of own goods to a warehouse located in another Member State.

The threshold for Intrastat imports is EUR 200,000 per year. The threshold for Intrastat exports is less than EUR 50,000 per quarter and more than EUR 50,000 per month.

The monthly Intrastat report should be submitted by the 25th day of the month following the reporting period.

The tax office in Italy

The address of the Italian tax office (Agenzia delle Entrate) is:
Rome, via Cristoforo Colombo n. 426 C/D – 00145

The Internet address is: https://www.agenziaentrate.gov.it/.
The office can be contacted by telephone: +39 0696668933

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Adam Grabiński