VAT IN ITALY – A QUICK GUIDE

VAT is a complex tax; this post tries to explain the VAT implication for you and your business. This post is not meant to be comprehensive of all the VAT legislation, and it does not consider any special tax regime.
WHAT IS VAT?
VAT stands for Value Added Tax, it is a tax levied on consumption of goods and services within the Italian borders.

WHO PAYS VAT?
VAT is paid by the final consumer; however, any business has to charge VAT on its products/services and can claim input VAT on products/services purchased.

WHICH VAT BRACKETS ARE CURRENTLY VALID IN LEVIED IN ITALY?
The Italian VAT system has currently three brackets:

  • 4%
  • 10%
  • 22%

Some activities are VAT exempt.

WHO HAS TO REGISTER FOR VAT?
Theoretically, any business that sells items and/or provides services in Italy has to register for VAT, the registration process can be made online with no fees.
Despite this general obligation there are some favourable tax regimes that disallow the VAT registration; these are:

  • Regime forfettario
  • Regime dei minimi agricolo

VAT OBLIGATIONS
Once your entity is VAT registered in Italy, it has to file several returns and pay any outstanding VAT liability either quarterly or monthly.

VAT CALENDAR
If the filer is monthly, any VAT liability is due on/before the 16th of the following month. If the filer is quarterly, VAT liabilities are due as follows:

  • I quarter due on/before May 16th
  • II quarter due on/before August 16th
  • III quarter due on/before November 16th
  • IV quarter due on/before March 16th (of the following year)

On top of it, on/before December 27th every VAT entity has to pay a prepayment, which will be subtracted to the March 16th payment.

On top of the liabilities payments, the following returns have to be filed:

  • Yearly VAT return on/before April 30th
  • Quarterly VAT liquidation on/before May 31st, September 18th, November 30th, and February 28th
  • Spesometro on/before September 18th and February 28th.

IF I BUY/SELL ABROAD HOW DO I PAY VAT?
International operations are VAT excluded (therefore no VAT is levied); however, if the sales is performed within the EU, you have to file the INTRASTAT model.

IF I AM LATE OR OMITT ANY DEADLINE, WHICH SANCTIONS APPLY?
The follow list includes only some of the possible sanctions.
Omitted Yearly return:

  • from 120% to 240% of any tax due, minimum € 258 up to € 2.056.

Omitted Intrastat:

  • from 120% to 240% of any tax due

Unfaithful Yearly return:

  • from 100% to 200% of any tax avoided

Omitted or incomplete VAT variation communication

  • from € 516 to € 2.065

Wrong input VAT claim

  • 100% of claim

HOW CAN WE HELP?
Accounting Bolla has helped many businesses in disentangling VAT implications, especially when operating in multiple jurisdiction; Accounting Bolla provides the following services:

  • Advisory on the VAT regime applicable
  • VAT direct registration
  • Accounting and bookkeeping
  • VAT returns and mandatory declaration
  • VAT refunds

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