Value added tax in Italy
Italian government has introduced Value added tax (also known as VAT) back in year 1972, having a local name in Italian “Imposta sul Valore Aggiunto (IVA)”. Italian officials have also decided to introduce the VAT directives and other initiatives developed by the European Union, where Italy is one of the founding members.
The Italian VAT regulations are can be found in the VAT laws and other legal acts, which are constantly backed up by judicial precedents. Local tax office also develops and introduces Administrative Doctrines, containing different general guidelines on a daily VAT application. The value added tax system is under supervision of the Italian Ministry of Finance.
As the common European Union VAT regulation states, all companies performing trade on the territory of Italy and supplying goods or services subjected to taxation, must comply with the local tax legal regulations. The latter have included the obligations to apply for the local VAT number, meet all requirements of the Italian VAT regulations as well as fill and submit VAT reports and other declarations on a regular basis.
Cases in which a company must register Italian VAT
Whenever a foreign, non-resident company is selling goods or rendering services, in this case it can face the legal requirement to apply at the tax office in the same manner as a local tax payer and acquire an Italian VAT number. Under the following circumstances a company may be obliged to acquire Italian VAT number:
- Importing goods into Italy, however, in case the client has Italian VAT number - the supplier is allowed not to estimate local VAT;
- Purchasing and trading goods on the territory of Italy, provided the supplier and customers aren’t Italian company with a local VAT number;
- Provision or acceptance of intra-community supplies, or receipt of goods as acquisitions from other European Union member states;
- Selling goods to individual consumers using the internet, are subjected to the local remote selling registration threshold;
- Storing goods in a consignment warehouse on the territory of Italy for the purpose of supplies in Italy or, alternatively, in the EU;
- Charging admission and entry fees to live events or exhibitions on the territory of Italy;
- E-commerce transactions, provided the goods are sold to the Italian consumers online.
Starting from year 2010, there are almost no situations in which a non-resident VAT number registration is required in order to provide services on the territory of Italy. Instead, the Italian customer records the transaction under the reverse charge mechanism.
Keep in mind that providers of digital, broadcasting or telecommunication services directly to the Italian consumers only have to apply for VAT number in one of the European Union member states according to the MOSS scheme, in order to file a single return covering all 28 member states.
Basic Italian VAT information
Below you can see basic information regarding Italian value added tax.
- Standard VAT Rate: 22%
- Reduced VAT Rate: 4%, 10%
- Registration Threshold Distance Selling: 35,000 €
- EU VAT number format: IT99999999999
The yearly VAT return and the Annual Communication of VAT Data must be submitted to the local tax administration. No monthly – quarterly periodical VAT returns have to be submitted. The Annual Communication of VAT Data has to be submitted only by digital ways of communication during February. The yearly VAT return has to be submitted exclusively by digital ways of communication by 31st September and has to be filed together with the corporate tax return.