The delegated legislator is responsible for determining the categories of goods and services eligible for preferential treatment. The fiscal reform delegation law encompasses a comprehensive review of VAT rates, aiming to rationalize them according to European Union criteria (Article 7, paragraph 1, letter c of Law 111/2023).This reform must align with the new EU regulations outlined in Directive 2022/842/EU, to be transposed by member states by December 31, 2024, and applicable from January 1, 2028. Under the new directive, each member state, including Italy, may adopt a maximum of two reduced rates above 5%, one reduced rate below 5%, and one exemption with the right to deduct VAT upstream (“zero rate”).While the directive allows member states to facilitate up to seven categories, Italy is exempt from this limit until 2031. Presently, Italy has three reduced rates (4%, 5%, and 10%), of which two are at least 5% and one is below 5%.While the national legislature aims to rationalize the number of rates, the current structure may remain compatible with the directive until 2031. However, expanding and redefining the goods and services subject to the “zero rate” regime may be necessary. Adoption of rates below 5% and a “zero rate” is limited to specific categories as defined by the directive, such as food products, water supply, pharmaceuticals, medical devices, passenger transport, and the supply of books, newspapers, and periodicals, including electronic formats. Details may vary.
Source: eutekne.info
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