VAT or value-added tax, is a tax on value-added, that is, on the increase in value of goods as a result of the production process or the creation of services. VAT is an indirect tax, it is collected at each successive stage of the turnover of 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, or IVA (Imposta sul Valore Aggiunto) has been in effect in Italy since 1972. The standard rate of VAT in Italy is 22% and covers all products and services, which are not covered by the reduced rates of 10%, 5% and 4% and the zero rate.
- 0% – internal or international transportation
- 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 journals, Television license, Some social housing, Some agricultural commodities, Some social services, Construction work on new buildings (for first housing), Stock of new buildings (for first housing))
- 5% – Some groceries, Some social services, Some passenger transportation
- 10% – Certain foodstuffs, Water supplies, Certain pharmaceutical products, Domestic passenger transportation, Admission to cultural events, Admission to certain sporting events, Certain agricultural commodities, Hotel accommodations, Restaurants, Eating out, Alcoholic beverages in bars and cafes, Certain social housing, Renovation and repair of private dwellings, Certain construction work in new buildings, Energy products (excluding heating), Firewood, Household waste collection, Flowers and cut plants for decorative purposes, Flowers and cut plants for food production
- 20% – All goods or services other than those indicated above
Italian VAT number
The Italian VAT number consists of 11 numbers with the prefix IT (Italy), e.g. IT12345678901. The first 7 numbers identify the taxpayer, while the eighth and ninth numbers correspond to the tax authority, and the last number is the control number.
Italian VAT invoice requirements
VAT invoices in Italy must be issued on the day the goods are delivered and up to 15 days after the end of the month in which the delivery took place. Remember thatm 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 of the invoice
- Unique invoice number
- VAT number of the supplier
- Full address of the supplier and customer
- Full description of the goods or services supplied
- Details of the quantity of goods
- Date of delivery (if different from invoice date)
- Net taxable value of the supply
- VAT rates applied
- Amount of VAT by rate
- 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 less than 100 euros, it is possible to provide a simplified version of the invoice.
VAT penalties and interest in Italy
The penalty for late payment of Italian VAT due is the imposition of an additional 30% VAT. An interest fee of 2.5% per year is also then charged. If the return is delayed, fines can reach over 240%!
More information about VAT in Italy: https://polishtax.com/italian-vat-number-what-is-it-and-who-needs-it/