Navigating VAT compliance in Italy doesn’t have to be as tangled as a plate of spaghetti or as complicated as choosing the right pizza toppings. In this guide, we’ll break down the essentials, so that managing VAT becomes as simple and satisfying as your favourite Italian dish.
Registration Requirements
As a starting point, it’s important to understand who is liable for VAT registration in Italy.
In Italy, there is no VAT registration threshold, meaning that any person—whether established or non-established—who regularly supplies goods or services in Italy as part of their business activities must register for VAT.
For non-established businesses making distance sales into Italy, the EU-wide threshold of EUR 10,000 per year, introduced on 1 July 2021, applies. Distance sales refer to cross-border business-to-consumer (B2C) transactions. If the total distance sales across the EU exceed this threshold, VAT registration is required in each country where supplies are made. Alternatively, businesses can opt for the One Stop Shop (OSS) registration, which simplifies VAT reporting across multiple EU countries.
While exemptions from VAT registration are not available in Italy, a special regime is offered to small businesses with an annual turnover below EUR 85,000 (subject to annual review and approval). Under this regime, businesses are exempt from charging output VAT and cannot recover input VAT. Instead, they are subject to a 15% flat tax that replaces both VAT and income tax obligations.
- Understanding VAT Fiscal Representation in Italy
Italian and EU-established businesses can register for an Italian VAT number directly, without needing a fiscal representative.
However, non-EU businesses (with some exceptions) are required to appoint a fiscal representative to register for VAT in Italy. A fiscal representative holds power of attorney to act on the taxpayer’s behalf and is jointly and severally liable for the taxpayer’s VAT obligations and debts.
If you need a fiscal representative in Italy, contact us—we’re here to assist.
- How to Register
To register for VAT, businesses must submit the AA7/10 Form within 30 days of commencing taxable activities in Italy. The submission must be accompanied by relevant supporting documents, such as:
- A description of the business activities supporting the need for VAT registration.
- The memorandum of incorporation from the country of establishment, among other documents.
Late registration may result in penalties imposed by the Italian tax office, so it’s important to get this step done on time.
VAT Obligations Once Registered
After registration, businesses must adhere to several administrative obligations, including charging VAT, submitting returns, and paying VAT liabilities on time.
- Charging VAT
In Italy, the following VAT rates apply:
- Standard rate: 22%
- Reduced rates: 4%, 5%, and 10%
- For example, these reduced rates apply to books, certain medical equipment, and food and drink supplies.
- Zero-rated supplies: 0%
- Examples include intra-EU supplies and exports.
Additionally, some supplies are exempt from VAT altogether, such as insurance services and education.
- Submitting VAT Returns
VAT returns must be filed quarterly in Italy. The deadline is the last day of the second month following the end of the quarter.
- For example, Quarter 1 (January – March) returns are due by 31 May.
In addition to quarterly returns, businesses must also submit an annual VAT return that summarizes the information reported throughout the year.
- Payment Obligations
Based on the taxable turnover, businesses must make either monthly or quarterly VAT payments.
- Monthly payments are due by the 16th of the following month.
- If paying quarterly, a 1% interest charge must be added to each payment.
It’s crucial to stay on top of payment deadlines to avoid penalties or interest charges.
Need Help with VAT Compliance in Italy? Contact Us for Expert Assistance!
With the right ingredients, even Italy’s VAT rules can come together smoothly. Whether you need help registering, understanding your obligations, or finding a fiscal representative, we’re here to assist. Feel free to contact us for more information and support in mastering your Italian VAT compliance!
