Italy – Comprehensive VAT Guide (2026 Edition)

• EU Membership and VAT System: Italy has been an EU member since 1958 and introduced VAT in 1973, replacing older turnover taxes. Today, Italy’s VAT system is fully harmonized with EU VAT rules, meaning Italian VAT applies to the supply of goods and services in Italy by businesses and to imports into Italy, in line with the EU VAT Directive. Cross-border EU transactions (like exports and intra-EU sales) follow the EU common rules (e.g. exempt with credit in Italy if conditions are met). The Italian VAT legislation is primarily contained in Presidential Decree No. 633/1972 and subsequent amendments, which implement the EU Directive. In 2023–2025, Italy has undertaken a major VAT law reform to consolidate and better align national provisions with EU principles, with a new consolidated VAT Code expected by end of 2025. [taxsummaries.pwc.com] [vatabout.com], [vatabout.com]
• Economy and Currency: Italy’s currency is the Euro (EUR). All VAT reporting and payments are in euros. If an invoice is issued in a foreign currency, the taxable amount and VAT must be converted to EUR using the official exchange rate (usually the rate published by the Italian customs or European Central Bank for the date the tax becomes chargeable). Businesses typically use the exchange rate on the invoice date or supply date to report VAT in EUR, ensuring consistency with Italian requirements (e.g. section 51 of DPR 633/72).
• Tax Authority: The administration of VAT in Italy is overseen by the Agenzia delle Entrate (Italian Revenue Agency), which handles registration, returns, payments, audits, and refunds. The Guardia di Finanza (Financial Police) also plays a role in VAT compliance enforcement, particularly for fraud investigations. Italy is at the forefront of VAT enforcement technology (see E-invoicing below), which gives the tax authority real-time data on invoices. [cgolegal.com], [cgolegal.com]
• Recent Developments: Italy has implemented real-time digital reporting through mandatory e-invoicing (since 2019) and phased out certain older filings (like the Spesometro and Esterometro – replaced by e-invoice data transmissions). Additionally, Italy obtained EU permission to continue using a split payment mechanism for public sector purchases through 2026 (with some scope reductions in 2025). The 2021 EU “e-commerce package” was adopted, including new OSS/IOSS regimes and removal of the old distance sales threshold (see Distance Selling Rules). Italian Budget Laws in recent years have introduced targeted changes (e.g. new domestic reverse charges for fraud-prone sectors and updated penalties and interest rates), which are noted in relevant sections below. [ey.com]

Local VAT Term

• Standard Rate – 22%: This is the default VAT rate applied to most taxable supplies of goods and services in Italy. All sales that are not specifically eligible for a reduced rate or exempt status are taxed at 22%. For example, standard-rated items include typical consumer goods (electronics, automobiles, clothing), most services (consulting, legal, engineering), and general business-to-business supplies. The 22% rate has been in effect since 2013. No increase is currently scheduled (earlier plans to raise it were canceled); the Italian government’s 2025 VAT reform focuses on aligning definitions rather than rate hikes. [taxopolis.eu] [vatabout.com]
• Reduced Rate – 10%: A broad range of essential or incentivized goods and services are taxed at 10%. This includes many food products (e.g. meat, pasta, coffee, bottled water) and non-alcoholic beverages; restaurant and catering services (including hotel meals); passenger transport within Italy (train, bus, ferry fares); hotel accommodation and camping fees; certain cultural event tickets (theater, concerts, sports events); and some pharmaceuticals and medical devices. For instance, a domestic flight or a museum ticket in Italy carries 10% IVA. The specific list of 10% items is in an annex to DPR 633/72 and has minor changes over time – e.g. feminine hygiene products were moved to 10% (and later 5%) to reduce the “tampon tax”. Recent change: As of 2022, menstrual sanitary products and certain baby products shifted from 22% down to 10% or 5%, as allowed by new EU rules. [taxopolis.eu] [vatai.com], [vatai.com]
• Reduced Rate – 5%: Often called a “super-reduced” rate, 5% IVA applies to a narrower set of socially important supplies. Examples include certain health and social care services (such as home care services provided by social cooperatives), some educational and welfare services by recognized entities, specific foods (e.g. minor special dietary products like gluten-free foods) and herbal medicines, and local passenger transport by water (some ferry services). Starting in 2020, female sanitary products (tampons, pads) were reduced to 5% (down from 22%) to promote gender equity. Italy uses 5% only where allowed by Annex III of the EU Directive – e.g. certain environmentally important or social goods. [vatai.com] [taxsummaries.pwc.com] [vatai.com], [vatai.com]
• Super-Reduced Rate – 4%: This is Italy’s lowest VAT rate, reserved for highly essential goods and services. It applies to, for example, basic unprocessed food staples (milk, fresh vegetables, bread, pasta flour); books, newspapers and periodicals (physical and digital) to promote literacy; medical equipment for persons with disabilities (e.g. wheelchairs, hearing aids); educational materials; and newly constructed primary residences (houses that qualify as first homes, under certain size limits). The 4% rate is meant to support access to culture and basic needs. For instance, books and e-books in Italy are priced with 4% IVA. [taxopolis.eu], [vatai.com] [vatai.com] [taxopolis.eu], [taxopolis.eu]

• Name: The VAT number is often called “partita IVA”. On invoices, it is typically labeled “P. IVA” followed by the 11-digit number. Companies also have a Codice Fiscale (fiscal code) in Italy, but for businesses usually the VAT number serves as the fiscal code if they are VAT-registered. [en.wikipedia.org]
• Verification: Italian VAT numbers can be validated through the EU’s VIES system. If the number is not 11 digits or has an incorrect check digit, it will be invalid. Italy does not use any letters in the number itself (aside from the “IT” prefix for international use).
• Format example: An Italian company might display its number as IT12345670017. In Italian notation it could be written with periods as 12345670017 (no prefix). The “IT” is used for cross-border invoices and VIES checks. The number must be included on all VAT invoices and on VAT returns.

• Italian businesses: Any person starting a business in Italy must obtain a VAT number before making taxable sales. Italy generally has no domestic sales threshold for VAT – even small businesses should register from the start unless they qualify for a special small-business exemption (see below). Thus, an Italian resident company charging for goods or services will need a partita IVA. Registration is part of the business incorporation or commencement procedure via the “Sportello Unico” (one-stop business portal).
• Small business exemption: Italy offers an exemption scheme for small businesses (naturally, only Italian-established sole proprietors or self-employed) under the “regime forfettario”. If an individual’s annual turnover did not exceed €85,000, they can opt to be exempt from VAT. In this regime, they do not charge VAT on sales and cannot deduct VAT on purchases. This is effectively a VAT registration threshold, but it is only available to natural persons (companies cannot use it). Those in the flat-rate regime still need to have a tax code/IVA number, but they do not file normal VAT returns. (They pay a substitute income tax on revenues instead.) If their turnover exceeds €85k (up to €100k transitional), they must switch to the normal VAT regime and start charging VAT. Aside from this regime, there is no general turnover threshold to avoid VAT for Italian businesses – all companies are expected to register, even for low volume, unless they qualify as flat-rate individual enterprises. [sme-vat-ru….europa.eu], [sme-vat-ru….europa.eu] [sme-vat-ru….europa.eu]
• Foreign (non-Italian) businesses: Any foreign entity making taxable supplies in Italy is obliged to register if the VAT on those supplies is not otherwise accounted for. For example, selling goods located in Italy to Italian customers typically requires the foreign supplier to register (unless the reverse charge applies – more on that below). Selling goods from abroad to Italian consumers (distance sales) may require registration or use of OSS (see Distance Selling). Providing services in Italy can trigger registration if Italian VAT must be charged (though many B2B services fall under reverse-charge instead). In summary, a non-established company must register for Italian VAT before its first taxable sale in Italy whenever it is responsible for collecting Italian VAT. Common cases include: maintaining a stock of goods in Italy to fulfill orders (which is now simplified by call-off stock rules if criteria met), organizing local events or exhibitions with ticket sales, certain installations or works in Italy, or distance sales to Italy above the EU threshold if not using OSS. There is no threshold for foreign companies – even one small taxable transaction in Italy can create an obligation to register if VAT is due on it. [marosavat.com] [marosavat.com], [marosavat.com]
• Voluntary registration: Unlike some countries, Italy does not allow voluntary VAT registration in advance of activity. You must have a genuine business activity (or imminent start) that creates a taxable transaction. Italian law actually forbids “precautionary” VAT numbers if no taxable transactions are carried out – an attempt to register without any Italian trading may be rejected. However, in practice, you register when you are about to start the activity (e.g. signing a contract or making a first sale). Late registration (after making taxable sales) can lead to penalties (typically €500–€2,000 for failure to register timely), plus back taxes. [marosavat.com]

• Direct Identification: Available if you are an EU-established business, or a non-EU business in a country with reciprocity. Direct identification (art. 35-ter DPR 633/72) means the company itself registers with the Italian tax office and obtains a VAT number, without needing a local agent. The company must fill out form ANR/3 and provide documentation (certificate of VAT in home country, etc.). Since Brexit, UK businesses were initially required to have a fiscal rep, but as of 2021 Italy and UK have a reciprocity agreement, so UK businesses can now register directly again. Norway, Switzerland, and a few others also fall under reciprocity, allowing direct reg. [vatai.com], [vatai.com] [arlettipartners.com], [arlettipartners.com]
• Tax Representative (Fiscal Representative): If a foreign company is not eligible or does not wish to direct-register, it must appoint an Italian fiscal representative (rappresentante fiscale) to act on its behalf. This is mandatory for non-EU companies without reciprocity agreements. The fiscal rep is an Italian-resident entity (often an accounting firm or tax advisor) who becomes jointly liable for the VAT debts of the foreign business in Italy. The rep will obtain a VAT number for the foreign business (the number is in the name of the foreign entity but care of the rep). The appointment must be done by notarized letter and notified to the tax office. EU companies can opt for a fiscal rep if they prefer, but it’s not required. Many EU firms choose direct ID to avoid joint liability issues. [marosavat.com] [vatai.com], [marosavat.com] [agenziaent…ate.gov.it]

1. VAT Group (Gruppo IVA) – Single Taxable Person Regime: Since January 1, 2019, Italy allows qualifying entities to form a single VAT group, pursuant to EU Directive Article 11. Companies that are closely related financially, economically, and organizationally may opt to create a VAT group. All members of a VAT group are treated as one single VAT taxable person – the group is assigned a new VAT number, and intra-group transactions are not subject to VAT. Key features: [agenziaent…ate.gov.it], [agenziaent…ate.gov.it]
   • Eligibility: Companies must be established in Italy (or have an Italian fixed establishment) and be under common control (>50% ownership), plus have economic and organizational links (e.g. in the same industry or with integrated activities and common management). The controlling entity can even be foreign if it’s in a country that exchanges tax information with Italy. All entities meeting the link conditions must join if a group is formed (all-in or all-out rule). [agenziaent…ate.gov.it], [marosavat.com]
   • Formation and Duration: Groups are formed by filing a form (AGI/1) with the tax agency between 1 January and 30 September to be effective from the next calendar year. Once in, the minimum term is 3 years. The option renews automatically unless revoked. [agenziaent…ate.gov.it], [marosavat.com]
   • Effects: The group gets one VAT number; individual members’ VAT numbers become dormant for VAT purposes. Supplies between group members are disregarded for VAT (no invoices with VAT among them). Sales to third parties by any member are treated as made by the group – one consolidated VAT return is filed for the group. All members are jointly liable for the group’s VAT debts. [agenziaent…ate.gov.it], [marosavat.com] [marosavat.com]
   • Skandia rule: Italy’s law follows the EU Court’s Skandia ruling – a foreign branch that joins an Italian VAT group can cause transactions with its head office to become taxable. Conversely, supplies between a group member and its foreign branch outside the group are not disregarded (since the foreign branch isn’t in the group). Essentially, the group perimeter is respected. [marosavat.com]
   • Example: If Company A owns 100% of Company B and they form a VAT group, A and B no longer charge VAT to each other. If A provides services to B, it issues a document but no VAT. They file one return. If A sells to a customer, the invoice still shows the group VAT number with 22% VAT if applicable. This simplification is beneficial for eliminating VAT on inter-company charges (useful for cash flow and avoiding non-deductible VAT in partially exempt industries like finance).
2. VAT Consolidation (Gruppo IVA “di fatto”) – Financial Offset Regime: Before the full Group IVA regime, Italy had (and still has) a VAT group payment consolidation mechanism (sometimes called “group VAT settlement” under art. 73 DPR 633/72). This is not a single taxable person; each company remains separate for VAT, but they can offset balances against each other and file a consolidated annual return. Key points: [marosavat.com], [marosavat.com]
   • Only companies with >50% control links qualify, similar to the financial link test. All must be Italian residents or fixed establishments of a foreign company.
   • If approved, one designated company (usually the parent) handles the payment or refund for the group’s net VAT each period. For instance, one company’s VAT credit can offset another’s VAT payable.
   • Intra-group transactions still carry VAT under this regime. Each entity keeps its own VAT number and must issue invoices to affiliates with VAT as usual. The benefit is purely cash flow simplification – netting off positions. [marosavat.com], [marosavat.com]
   • This older regime requires an application and certain guarantees if credits are offset. It’s often used by corporate groups that didn’t want to meet the all-in criteria of the full VAT Group or that includes entities like branches which couldn’t join the single taxpayer regime.
   • Starting 2019, most large groups moved to the new Group IVA if advantageous, since it eliminates inter-company VAT. But the consolidation option remains for those who prefer it or don’t qualify for full grouping.

• EU Businesses (8th Directive refunds): If a company is established in another EU Member State and not registered in Italy, it can reclaim Italian VAT through the EU electronic refund system (sometimes called the “8th Directive procedure”). The business submits a refund application via its home country’s tax portal (by 30 September of the following year) specifying Italian VAT it paid on business expenses. The Italian tax authorities then process the claim. Conditions: The claimant must not have a fixed establishment or VAT registration in Italy during the period, and the expenses must be ones that would be deductible if incurred by an Italian taxable person (e.g. no refunds for Italian VAT on entertainment or passenger cars due to local deduction limits). Italy may require copies of invoices for amounts over €1,000 (or €250 for fuel) and will typically refund within ~4-8 months if approved. Notably, Italy allows EU businesses to use this process even for odd cases like having had a fiscal rep – as long as the business itself wasn’t ‘VAT resident’ in Italy, the refund portal can be used. The refunded VAT is paid out directly to the foreign business’s bank account (no Italian bank account is required). [agenziaent…ate.gov.it], [agenziaent…ate.gov.it] [arlettipartners.com], [arlettipartners.com]
• Non-EU Businesses (13th Directive refunds): Companies established outside the EU can also claim Italian VAT on a reciprocal basis. Italy requires reciprocity agreements with the non-EU country for refunds. Currently, Italy recognizes only a handful of countries as reciprocal: Switzerland, Norway, Israel, and (post-Brexit) the United Kingdom. Businesses from these countries can apply for a refund of Italian VAT without needing to register or appoint a fiscal rep. Those from other countries (e.g. USA, China) generally cannot get a direct VAT refund from Italy because of no reciprocity – effectively, Italy will refund them only if they appoint an Italian fiscal representative and go through the normal VAT return process (which is usually not worthwhile for a few invoices). In early 2024, Italy and the UK formally signed a reciprocity agreement confirming UK traders can use the refund process retroactively from 2021. [agenziaent…ate.gov.it], [agenziaent…ate.gov.it] [arlettipartners.com], [arlettipartners.com] [agenziaent…ate.gov.it]
  Procedure for non-EU refunds: The claim is made via a paper form (Form VAT 79) sent to the Italian tax office (Centr`o Operativo di Pescara) by 30 June of the following year. The claimant must either have a fiscal rep in Italy file it or (if from CH, NO, IL, UK) can file directly by post. They must include a certificate of VAT status from their country and original invoices. Italy may take longer (up to 6-12 months) to process these. The same substantive rules on which VAT is refundable apply (e.g. no reclaim for Italian restaurant meals since those aren’t deductible for locals). Also, the foreign business’s home country must allow similar refunds to Italian businesses (which CH, NO, IL, UK do). If an expense in Italy relates to exempt activities of the foreign business, the refund will be prorated or denied (must have taxable business activity to some degree). [arlettipartners.com], [arlettipartners.com] [agenziaent…ate.gov.it]

• When Required: Any business established outside the EU (in a country without a special agreement) must appoint an Italian fiscal representative to register for VAT. This representative must be an individual or company established in Italy who agrees to take on the VAT obligations of the non-resident. For example, a U.S. company selling goods in Italy must sign a fiscal agency agreement with an Italian entity (often a VAT consulting firm) who will handle its Italian VAT. The requirement also applied to UK companies for 2021–2023 until the reciprocity arrangement was confirmed (now UK companies can skip the rep). Non-EU businesses in Switzerland, Norway, or certain others can choose direct reg (so rep not strictly required) but many still use reps for convenience. EU businesses are not required to have a fiscal rep – they can use direct ID – but they may voluntarily appoint one if they prefer a local agent to manage compliance. [marosavat.com], [agenziaent…ate.gov.it] [arlettipartners.com], [arlettipartners.com]
• Joint Liability: By law, the fiscal rep is jointly and severally liable for any VAT debts and penalties of the foreign business in Italy. This means the tax authorities can pursue the representative for unpaid VAT if the foreign principal doesn’t pay. Because of this risk, fiscal reps tend to be very cautious. They often demand upfront deposits or bank guarantees from the foreign business to cover potential liabilities. [marosavat.com] [marosavat.com], [marosavat.com]
• Guarantee Requirements (new in 2024): A decree in late 2023 introduced financial guarantee requirements for entities acting as fiscal reps for multiple companies. Depending on the number of non-EU clients represented, the rep must have a bank guarantee or insurance of a certain minimum amount: e.g. €30,000 if representing 2–9 companies; €100,000 if 10–50 companies; up to €2,000,000 if representing over 1000 companies. This was implemented to ensure reps can cover VAT if many of their clients default. It does not mean each foreign company must post a guarantee, but the rep itself must secure one. In practice, reps may pass on this cost via higher fees. This requirement took effect in 2024, so fiscal rep services in Italy have become stricter on onboarding. [vatai.com], [vatai.com]
• Appointment Process: The foreign business issues a power of attorney or letter of intent naming the Italian representative. This document must be notarized and registered in Italy. The rep then submits a registration form to get the VAT number assigned to the foreign business (under the rep’s auspices). The VAT number allocated is unique to that foreign company (it’s not under the rep’s number; the rep may be handling dozens of different VAT numbers). The Italian Tax Office in Rome/Pescara often handles non-resident registrations and will issue a certificate of attribution. [agenziaent…ate.gov.it]
• Ongoing Role: The fiscal rep is responsible for issuing invoices (or ensuring the foreign company’s invoices meet Italian rules), keeping VAT records, filing periodic VAT returns and annual return, and paying the VAT on behalf of the foreign business. Essentially, the rep steps into the shoes of the taxpayer for Italian VAT. Some foreign companies allow the rep to fully manage invoicing and collection in Italy due to e-invoicing requirements (since 2019, even foreign companies with an Italian VAT number are subject to e-invoicing for B2B sales – a rep can handle the SDI system interface for them). [marosavat.com]
• Termination: If the foreign company deregisters (ceases the activity in Italy), the fiscal rep mandate can be revoked by notifying the tax office. However, the rep remains liable for the period it covered. There is also a requirement that if the rep resigns, a new one must be appointed or the VAT number canceled.
• Example scenario: A Canadian company regularly ships and installs equipment in Italy. It must have Italian VAT registration. Since Canada has no reciprocity, the company hires “XYZ Srl” in Milan to act as its fiscal rep. XYZ Srl registers the Canadian company for VAT, files its quarterly VAT returns, and pays the VAT to the Agenzia Entrate. XYZ keeps copies of all Italian invoices and possibly issues them on behalf of the Canadian firm. If the Canadian firm fails to fund a VAT payment, XYZ is on the hook to pay it, so their contract likely includes a clause to draw on a deposit.

• Invoicing in Foreign Currency: It is permitted to issue invoices in a foreign currency (for example, an Italian business could invoice a U.S. client in USD). However, the invoice must show the VAT amount in euro or an equivalent conversion. Italian law (Art. 13(3) DPR 633/72) requires that for VAT purposes, the taxable base and VAT due are calculated in EUR. Typically, the invoice will state the net in foreign currency, then the exchange rate, and then the VAT in EUR. Alternatively, some companies issue a fully EUR-denominated invoice even if pricing was set in another currency, to simplify matters.
• Applicable Exchange Rate: The standard rule is to use the official exchange rate on the day the tax becomes chargeable (tax point). In practice, businesses usually take the European Central Bank (ECB) rate or the Italian Customs Agency rate (which is derived from ECB rates) for the date of the invoice or supply. The Italian tax authority accepts the ECB reference rate as an objective source. If an invoice is issued late, generally the rate at the invoice date (which is then the tax point) is used. Imports: For customs declarations, a monthly customs EUR conversion rate might be used (set by Italian Customs). But once import VAT is assessed in EUR, no further conversion is needed.
• Gain/Loss on exchange: Any difference due to exchange rate fluctuation between invoice date and payment date does not affect the VAT already accounted. VAT is fixed in EUR at the tax point. For instance, an Italian company invoices €1000 equivalent in USD when EUR/USD = 1.10 (so $1100) plus 22% VAT = €220. It reports €1000 taxable and €220 VAT. If the customer pays later when rate is 1.05, the company might get a different EUR amount when converting the USD, but the VAT stays €220 in any case. Exchange gains or losses are treated as financial income/expense, not adjustments to VAT.
• Listing on VAT forms: If a foreign currency invoice was issued, the internal accounting should record the EUR value. Italy’s electronic invoice format (FatturaPA) actually requires amounts in EUR, so if an Italian supplier issues an e-invoice in foreign currency, they typically still include an EUR conversion. For OSS/IOSS filings, everything is also declared in EUR.
• Dual Display: Some invoices to Italian customers might show both currencies (e.g. “Total: $1,100 (VAT 22% = $242) – converted at ECB rate to €1,000 (VAT = €220)”). The Italian customer can only deduct the €220 on their return, so having that clearly stated is important.
• Intrastat and ESL: If reporting intra-EU supplies in Intrastat, values should be in EUR. If a transaction was agreed in GBP or USD, the seller should convert to EUR using the conversion rate of the date of supply for Intrastat declaration consistency.
• No Other Currency for VAT: All official VAT payments to the Italian Treasury must be in EUR (through Italian bank accounts or SEPA transfers). The F24 payment form used for VAT payments only accepts euro-denominated amounts.
• Summary: Always convert foreign currency amounts to EUR for the purposes of VAT computation at the prevailing official rate on the transaction date (or invoice date). Proper documentation of the rate used is advised (e.g. keep a printout of ECB rate). The Italian Civil Code also requires bookkeeping in EUR for Italian companies, though supplementary currency ledgers are allowed.

• EU VAT Directive: As an EU member, Italy’s VAT system is governed by the EU VAT Directive (Council Directive 2006/112/EC). Italy must conform to the Directive’s rules on what’s taxable, rates (within allowed parameters), exemptions, etc. Where it has obtained derogations, these are via Council Implementing Decisions (for example, the split payment mechanism and certain reverse charges are authorized derogations under Article 395 of the Directive). Italian courts often interpret domestic VAT law in light of EU principles and ECJ case law. [ey.com], [ey.com] [vatabout.com], [vatabout.com]
• Primary National Laws: The core VAT law is Presidential Decree 633 of 26/10/1972, often referred to simply as “DPR 633/72”. This Act (with subsequent amendments) contains the main VAT rules: taxable events, place of taxation, tax base, rates, exemptions, invoices, bookkeeping, returns, etc. Over the years it has been amended by many finance acts to stay aligned with the evolving EU rules (e.g. changes in 2010 for the EU VAT Package on services, 2020 EU quick fixes, etc.). Another important piece is Legislative Decree 331/1993, which implemented the Single Market VAT changes (e.g. rules on intra-Community acquisitions and supplies, and Intrastat obligations) when the EU removed internal borders in 1993. These two laws are the backbone of Italian VAT law. [taxsummaries.pwc.com]
• Implementing rules: The Ministry of Economy and Finance and the Agenzia delle Entrate issue regulations, circular letters, and rulings that provide detailed guidance. For example, Ministerial Decree 1979 (as updated) lists which transactions fall under which VAT rates; revenue agency Circulars clarify tricky points (like the 2018 Circular 19/E which explained the new VAT grouping rules). While not “law”, these are important for interpretation.
• Recent codification efforts: In March 2023, the Italian Parliament empowered the government to reorganize and consolidate VAT legislation. By August 2025 Italy aims to produce a Consolidated VAT Text merging DPR 633/72 and its myriad amendments into a coherent code. A preliminary draft with 171 articles across 18 titles was approved by the Council of Ministers in July 2025. This reform’s goals are to align definitions with EU law (e.g. aligning the definition of “supply of goods” to EU economic transfer concept), clarify exemption options (like in real estate and finance), modernize rate classifications, ease pro-rata deduction rigidities, etc. Until it’s enacted, DPR 633/72 remains in force. The new code will not dramatically change VAT outcomes (rates, etc.), but will streamline text and incorporate ECJ interpretations. [vatabout.com] [vatabout.com], [vatabout.com]
• Other relevant laws: The Italian Civil Code has provisions on invoice retention and record-keeping (requiring 10-year retention of accounting records, which include VAT invoices, per Civil Code Art. 2220). The Tax Penal Law (Legislative Decree 74/2000) sets out crimes for VAT evasion over certain thresholds. The Statute of Taxpayers’ Rights (Law 212/2000) provides general principles (like non-retroactivity and clarity) that apply to VAT as to other taxes.
• Tax Authority Pronouncements: The Agenzia delle Entrate regularly publishes Risoluzioni (Resolutions) and Risposte a interpelli (Private rulings) which interpret VAT law in specific scenarios. Though binding only to the applicant, they indicate the tax authority’s stance. For example, in 2022 the Agency issued Ruling 248/2022 clarifying conditions for VAT refunds to Israeli companies under reciprocity, and in 2021 Resolution 7/E to confirm UK-established traders could directly identify post-Brexit. These clarify application of art. 38-ter DPR 633/72 (refunds) and art. 35-ter (direct ID). [arlettipartners.com], [arlettipartners.com] [arlettipartners.com]
• Courts: VAT disputes can be appealed to Provincial and Regional Tax Courts, and ultimately to Italy’s Supreme Court (Corte di Cassazione) and/or referred to the Court of Justice of the EU (ECJ) for interpretation of EU law. Italian jurisprudence has, for instance, addressed the neutrality of VAT deduction even in cases of fraud (there was a notable Supreme Court case in 2025 affirming input VAT rights despite supplier fraud). ECJ decisions (like Mercedes-Benz Italia on the pro-rata issue) have prompted law changes. The legal framework is thus a mix of statutes and interpretive case law. [vatabout.com]
• Relationship to EU law: Whenever there’s a conflict between Italian law and the VAT Directive, Italian courts should interpret national law in conformity or, if impossible, disapply the inconsistent national provision in favor of the Directive/ECJ jurisprudence. For example, Italy historically said a “sale of goods” for VAT required transfer of legal title, but the ECJ emphasizes economic transfer of right to dispose. The 2025 reform explicitly seeks to adjust Italy’s definition to match the EU concept and avoid such divergences. [vatabout.com], [vatabout.com]

• Agenzia delle Entrate (Revenue Agency): This is Italy’s national tax authority under the Ministry of Economy and Finance. It is the main body responsible for VAT policy administration, registrations, return processing, audits, and collections. The Agenzia delle Entrate:
  • Registers taxpayers for VAT (through its local offices or online submissions) and maintains the database of VAT numbers.
  • Receives VAT returns (annual and periodic) and payments. VAT returns are filed electronically to the Agenzia’s systems. Payments are made via the F24 form to the Italian Treasury, which the Agenzia oversees in terms of reconciliation.
  • Issues rulings and interpretations: Taxpayers can request private letter rulings (interpello) from the Agency on specific VAT questions. The Agency also publishes guides and Circular letters (Circolari) to explain new VAT rules. For example, Circular 26/E of 2022 provided guidance on e-invoicing rules for small taxpayers; Resolution 22/E of 2024 acknowledged the Italy-UK VAT refund reciprocity agreement. [arlettipartners.com], [arlettipartners.com]
  • Audits and assessments: The Agenzia conducts VAT audits (controlli IVA) either at taxpayer premises or in-office. They cross-check returns against data from the SdI e-invoicing system and Esterometro, Intrastat, etc. If discrepancies or non-compliance are found, the Agenzia issues notices of assessment (avvisi di accertamento) demanding additional VAT, penalties, and interest.
  • Refunds: The Agenzia handles VAT refund claims – for Italian taxpayers claiming credit refunds on returns, and for foreign businesses’ 8th/13th Directive refunds (via its Pescara Operational Center). They verify eligibility and authorize payment.
  • Online services: The Agenzia’s portal (Entratel/Fisconline) is where businesses file VAT returns, Comunicazioni, verify their VAT ledgers, and can see their “Fatture e Corrispettivi” (electronic invoice data). The Agency also provides pre-filled VAT ledgers and in some cases pre-drafted returns for certain taxpayers based on e-invoice data (an innovation launched in 2021-22 for small businesses).
• Guardia di Finanza (GdF): This is Italy’s financial police, a specialized law enforcement agency under the Ministry of Economy and Finance. The GdF works closely with Agenzia delle Entrate to investigate VAT fraud and evasion. They have powers to perform inspections and criminal investigations. For instance, in cases of carousel fraud, false invoicing schemes, or significant underreporting, the Guardia di Finanza typically leads the operation, conducting raids or seizing documents. They also check compliance like the usage of fiscal cash registers by retailers. Where VAT violations are severe enough to be criminal (e.g. intentional evasion over certain thresholds, issuance of false invoices), the GdF will refer cases for prosecution under criminal tax law.
• Customs Agency (Agenzia delle Dogane e dei Monopoli): Although primarily in charge of customs duties, the Customs Agency administers VAT on imports. It collects import VAT at the border and enforces VAT rules in free zones and warehouses. It also liaises with Agenzia Entrate for smooth crediting of import VAT for VAT-registered traders.
• Sogei S.p.A.: This is the IT partner of the tax authorities. It manages the SdI (Sistema di Interscambio) e-invoicing platform and many databases. While not an authority, Sogei’s systems automatically check invoice data and cross-reporting. Taxpayers interact with these systems via the Agenzia’s online portal.
• Ministry of Economy and Finance (Dipartimento Finanze): This department is responsible for VAT legislation and high-level policy. It represents Italy at the EU VAT Committee and when seeking EU derogations. The Ministry issues decrees for implementing rules (e.g. detailing invoice content, thresholds, etc.). However, it’s the Agenzia Entrate that executes the day-to-day.

• Taxable Persons: Anyone engaged in an economic activity independently can be a taxable person for IVA. This includes individuals (sole proprietors, freelancers), companies, partnerships, etc., carrying on business or professional activities. Public bodies can be taxable persons when they engage in commercial activities outside their governmental capacity. Non-residents can also be taxable persons when they do business in Italy (hence requiring them to register via rep or direct id as discussed). Small flat-rate taxpayers are still taxable persons, though exempted by special regime. Employees are not taxable persons for their salaries, since they lack independence.
• Supplies of Goods and Services:
  • A supply of goods in Italy is the transfer of the right to dispose of tangible property as owner. This includes sales, but also certain leases with transfer of title at end, barter, and self-supplies (business using goods for private use). Italy historically tied “supply of goods” to legal title transfer, but the trend and upcoming reform align it to the EU concept of any transfer of economic ownership (so things like a finance lease are treated as goods supply if it’s essentially a sale). [vatabout.com] [vatabout.com], [vatabout.com]
  • A supply of services is any transaction that is not a supply of goods. This captures an extremely wide range: the provision of work or labor, intellectual or digital services, leasing of goods, granting rights or licenses, obligations to refrain from doing something, etc. In Italy, services also include immovable property rentals, transportation, telecommunications, broadcasting, electronic services, among others.
  • Place of supply: Not every supply by an Italian business is taxed in Italy – it depends on where the supply is deemed to occur. Italy’s rules mirror the EU rules: most B2B services are taxed where the customer is (so an Italian company’s service to a German business is outside Italian VAT scope, taxed in Germany via reverse charge). B2C services are usually taxed where the supplier is (Italian photographer serving a US individual – the place would be Italy and VAT should apply, unless a specific exception). Goods are taxed where they are located or delivered. For goods: If goods are in Italy and sold domestically, that’s Italian VAT; if goods are shipped from Italy to another EU country, that’s an intra-Community supply (0% in Italy, taxed in destination by acquisition); if goods are imported into Italy, import VAT charged; if goods are exported from Italy, that’s outside scope of VAT (0%). Thus, “in the territory of the State” (territorio dello Stato) is a key phrase – only supplies deemed in Italian territory are taxable in Italy. Italy’s territory for VAT includes mainland Italy and islands, excludes San Marino and Vatican (which have separate arrangements), and excludes Livigno, Campione d’Italia, and the Italian waters of Lake Lugano (VAT-exempt zones by law). [taxsummaries.pwc.com]
  • Examples: An Italian company selling merchandise to a client in Rome – supply of goods in Italy, subject to IVA. The same company selling and shipping to a client in France – not subject to Italian IVA (0% tax as intra-EU supply, French client does acquisition tax). An Italian consultant advising a client in the UK (B2B) – not subject to Italian IVA (place of service = UK, client does reverse charge). An Italian hotel providing lodging to a tourist (B2C service) – place of service is Italy, so 10% IVA.
• Consideration vs. no consideration: Generally only supplies made for consideration (for payment) are taxed. However, certain free transactions are “assimilated” to taxable supplies to prevent avoidance:
  • Self-consumption of goods: If a business takes goods out of stock for private use or gifts them (above a small value threshold), it’s treated as a deemed supply and VAT is due on the cost value. Italy allows small gifts <= €50 (like promotional items) without VAT. [marosavat.com]
  • Self-supply of services: If a business uses its services for private needs (e.g. a lawyer doing personal legal work – though hard to value), or provides free services that aren’t strictly business-related, sometimes it’s taxed. Italy’s rules in art. 2 and 3 of DPR 633/72 detail these cases.
  • Transfer of a going concern (TOGC): One notable exception – the sale of an entire business (going concern) is outside the scope of VAT in Italy (subject to registration tax instead). So that is not a supply for VAT purposes if conditions are met.
• Out of Scope Activities: Some activities are simply not considered taxable supplies at all:
  • Non-economic activities: e.g. a hobby, or a purely private transaction by someone not in business (selling your used personal car as a private person – not subject to VAT).
  • Employee to employer services: not independent, hence not VAT-able.
  • Statutory duties by public bodies: e.g. issuing ID cards, fines, etc., where the public authority acts as a public authority, are outside VAT.
  • Certain compensation payments: e.g. true damages or indemnity (not payment for a service).
  • Italy also treats financial contributions or grants (with no direct service in return) as outside scope (they are not payments for a supply).
• Exemptions vs. outside scope: Exempt (esente) means it’s within the scope but no VAT charged (like healthcare, banking as noted earlier), whereas outside scope means VAT law doesn’t apply at all. For example, interest a company earns on a bank deposit is outside the scope (not a consideration for a supply by the company), whereas interest it charges on late payments might be considered incidental to a supply (exempt as financial service).
• Government transactions: Sales by government bodies (like a municipality selling land) can fall under VAT if done as a business activity (and they often have to get a VAT number for such sales). Italy applies Article 13 of the Directive which keeps non-competitive public activities out of VAT but taxes those that are in competition with private enterprises.

• Goods (One-Time Supply): The basic rule for a supply of goods is that VAT becomes due at the moment of delivery or shipment of the goods to the purchaser. In legal terms, when the right to dispose of the goods is transferred. If goods are shipped, the tax point is when dispatch starts. If goods are simply handed over, that moment is the tax point. Example: If an Italian wholesaler delivers furniture to a local buyer on March 15, that is the tax point – March 15 is when VAT on that sale becomes chargeable. [marosavat.com]
• Services: The general rule for one-off services is that the VAT is due when the service is completed. However, Italian law has effectively aligned with the EU rule that for most services, if an invoice is issued or payment is received earlier, that can create the tax point. Notably, Italy’s domestic law has long said “for services, VAT is due upon payment”. In practice, for B2B services which must be invoiced by a certain deadline, the issuance of the invoice often coincides with payment. If a service is performed and no invoice or payment yet, Italian rules indeed say the tax point is when payment occurs. So Italy leans toward a cash basis tax point for services unless invoiced earlier. For consistency with EU law, if a service is completed and invoice due by a certain date, that due date could be tax point. But to simplify: VAT on services typically arises when the service is paid (for B2B, within the required issuance deadline, see invoicing section). E.g., an Italian consultant finishes a project on July 1 and issues an invoice on July 10, paid on July 20 – tax point by Italian rule is July 20 (payment). But since invoice issued July 10, arguably that also triggers VAT then; in practice the difference is academic if within same period. [marosavat.com]
• Continuous or Periodic Supplies: If goods or services are supplied continuously over a period, Italy follows the EU rule: ongoing supplies create a tax point at least at intervals of one year (for services) or at agreed billing periods. For example, construction projects can be treated as ongoing services; Italy would treat each progress payment or at least year-end as a tax point for work done up to that point. Rental of equipment over 6 months – if monthly invoicing, each invoice is the tax point; if they forgot to invoice for an entire year, then on the 12-month mark a tax point is deemed.
• Periodic utility supplies: Electricity, gas, water etc. have tax points when each meter-reading or billing occurs. Italy’s law specifically lets certain continuous services be taxed upon payment or issuance of invoice.
• Advance Payments (Deposits): If a payment (advance or deposit) is received before the goods or service is delivered, VAT becomes due on the amount received at the time of receipt. Italy strictly applies this: advance invoices carry VAT. For instance, if a customer pays a €5,000 deposit in April for goods to be delivered in June, the supplier must issue an invoice for the €5,000 in April and charge VAT then. When the final delivery happens in June, the remainder is invoiced with VAT then. [marosavat.com]
  • Note: If a deposit is purely refundable and not a payment on account (e.g. security deposit), that might not trigger VAT. Only advance payments for the supply itself trigger VAT.
• Invoice Issuance Before Supply: If an invoice is issued in advance of the supply (which is uncommon except perhaps in stage payments), that invoice triggers VAT on the invoiced amount at issuance. Typically, one wouldn’t invoice before providing goods unless requiring prepayment, which merges with the above scenario.
• Delivery with Reservation (Goods on approval/consignment): If goods are supplied on a sale or return basis (consignment stock or goods on approval), Italy’s rules (mirroring EU) say the tax point is when the customer approves or takes ownership of the goods. If the approval period expires without return, at that expiration it’s a supply. Italy historically allowed consignment stock without immediate VAT and now with the EU call-off stock simplification (see next section) the transfer to warehouse isn’t taxed – the tax point is when the customer eventually takes the goods from stock for use. Essentially, consignment sales: VAT triggers when the consignee sells or 12 months pass, per EU “call-off stock” uniform rule now adopted. [marosavat.com], [marosavat.com] [marosavat.com]
• Imports: The time of import is when goods clear customs into Italy – that’s when import VAT is charged (at the border). The import VAT must be paid or accounted at that point. If goods are placed under a customs suspensive regime or into a bonded warehouse, the import VAT is deferred until they exit into free circulation. [marosavat.com]
• Intra-EU acquisitions: For goods arriving from another EU country, the tax point is usually the 15th of the month following the month of dispatch, or the date of the invoice by the supplier if earlier (EU default rule). Italy follows this: for an Italian buyer acquiring goods from Germany, if the German supplier ships goods on March 20 and invoices March 22, tax point in Italy is March 22; if they didn’t invoice by April 15, then April 15 by law. The Italian purchaser must account for acquisition VAT in that period.
• Legal Deadline for Invoicing: Italian law requires that an invoice for a supply of goods or services be issued by a certain time limit (generally within 12 days of the supply for domestic transactions). If one issues the invoice within that allowed window, the tax point can align with invoice date. If the 12-day rule is used, effectively you could deliver goods on Jan 1 and invoice Jan 10, and the tax point would be Jan 10 because Italy allows that slight shift. However, for safety most treat the earlier of supply or invoice as tax point.
• Cash Accounting (special option): Italy has an optional cash accounting scheme (IVA per cassa) for small businesses (turnover ≤ €2 million) where tax point is shifted to payment – both for outputs and inputs – but no later than 12 months after supply. Under this scheme, if the customer doesn’t pay within a year, VAT becomes due at the one-year mark regardless. This is a special regime one must opt into. Outside that, the normal rules above apply. [agenziaent…ate.gov.it], [agenziaent…ate.gov.it] [agenziaent…ate.gov.it]
• Special cases: Certain transactions have explicit rules:
  • Inter-community supply of goods: occurs when dispatch begins (or invoice if earlier). [marosavat.com]
  • Hire purchase/lease with title transfer: If it’s effectively a supply of goods, tax point likely at delivery (even if payments over time, Italian law would treat initial delivery as supply of goods).
  • Voucher sales: Italy implemented the EU voucher rules: sale of a single-purpose voucher creates a tax point at sale (since the underlying supply is known), whereas multi-purpose vouchers are taxed when redeemed. For example, selling a phone top-up card (single purpose for telecom service at 22%) triggers VAT immediately; a general gift card (multi-purpose) triggers VAT only when used to buy something.

• Who must issue an invoice: Generally, any taxable person supplying goods or services subject to Italian VAT must issue an invoice to the customer. In B2B scenarios, invoices are always required. In B2C scenarios, an invoice is not always mandatory if the sale is documented by a fiscal receipt or scontrino (for retail sales), unless the customer asks for an invoice. However, since 2019 Italy mandates e-invoices even for many B2C sales (though consumers get an option to receive a simplified document). Exempt and zero-rated supplies also require invoices (with a note of the article granting exemption). [taxopolis.eu]
• Timing (Invoice issuance deadlines): Italy’s standard rule is that an invoice must be issued by the 12th day after the taxable event (supply). For example, if goods are delivered on July 1, the invoice can be issued anytime up to July 13 and still be considered timely. This 12-day rule was introduced in 2019 to align with real-time e-invoicing flows. For services, if the service is completed and no payment immediately, the 12-day rule similarly applies from completion. If payment comes first (advance), an invoice for that advance must be issued at receipt of payment. Continuous supplies can be invoiced monthly or per contract terms (at least yearly).
  Additionally, there’s a requirement that year-end transactions (supplies made by Dec 31) must be invoiced by early January; but practically the 12-day rule covers that. If an invoice is not issued by the deadline, the supplier is liable to penalties for late invoicing (which can be substantial, 90% to 180% of the VAT omitted).
• Electronic Invoicing Mandate: Italy was the first EU country to mandate B2B e-invoicing. Since 1 January 2019, **all domestic invoices between resident businesses must be issued electronically through the government’s Sistema di Interscambio (SdI) platform. This requirement covers B2B and B2C invoices where the supplier is established in Italy. Key points: [marosavat.com], [marosavat.com] [marosavat.com]
  • The invoice must be in FatturaPA (XML format) with specific fields, digitally signed, and sent via the SdI. The SdI acts as a clearinghouse: it checks the invoice and delivers it to the customer.
  • Paper or PDF invoices are not valid for Italian VAT for domestic transactions; only the XML transmitted is the legal invoice. [marosavat.com]
  • Foreign suppliers who are not established in Italy (no Italian VAT number) are not mandated to use SdI for their invoices to Italian customers. However, the Italian customer must report any purchase invoice from abroad via a special Esterometro report (until mid-2022; now they instead submit those invoices through SdI as “Integration” self-invoices). [marosavat.com], [marosavat.com]
  • Exemptions: Initially, very small flat-rate taxpayers were exempt, but from July 2022 even firms under the flat-rate regime exceeding €25k had to e-invoice, and from 2024 all flat-rate taxpayers must use e-invoicing. Also, healthcare providers (doctors, pharmacies) were exempt due to privacy (they send data to the health system separately). Public bodies had an e-invoicing mandate even earlier (2015). [marosavat.com], [marosavat.com]
  • The e-invoice must be sent in real time. There is some tolerance, but effectively one should transmit shortly after issuance. The timestamp SdI receives it is important.
  • Digital signature: E-invoices are generally signed with the issuer’s digital certificate to guarantee authenticity and integrity. The SdI also appends a timestamp. [avalara.com], [avalara.com]
  • In practice, this system means the tax authority gets a copy of every invoice in Italy in real time. This replaces the old requirement of sending an “annual customer/supplier list” (Spesometro) – that’s no longer needed since the authority already has the data.
• Content of Invoice: Italian VAT invoices must contain all details required by the EU Directive (Art. 226) and some Italian specifics. Required info includes: [marosavat.com], [marosavat.com]
  • Date of issue and a unique sequential number that identifies the invoice (Italian invoices often have a numbering with year prefix, e.g. “2026/10” for the 10th invoice of 2026).
  • Supplier’s name, address, VAT number. [marosavat.com]
  • Customer’s name, address and VAT number (or tax code). For B2C, if no VAT, the Codice Fiscale (personal tax code) or at least full name and address.
  • Quantity and nature of goods or services, with a clear description. For goods, description and possibly item codes; for services, description of work.
  • Date of the supply if different from invoice date (with the 12-day rule, if invoice date differs, one might mention delivery date or phrase “goods delivered on [date]”).
  • Net unit price and net total amount (taxable amount) for each line or VAT rate category.
  • VAT rate applied (e.g. 22%, 10%, etc.) and the VAT amount for each rate. If multiple VAT rates on an invoice, show breakdown by rate.
  • Any exempt or zero-rated items should be marked with a reason reference (e.g. “Non imponibile art. 8 c.1.a DPR 633/72” for an export).
  • If reverse charge applies (domestic reverse charge in building sector, or if customer is tax debtor), state “inversione contabile – art.X” and no VAT amount.
  • Fiscal representative info: if issued by a fiscal rep on behalf of non-EU, must mention rep’s data and foreign supplier’s data.
  • Currency: as noted, if not in EUR, exchange rate to EUR should be indicated or at least the VAT in EUR.
  • Electronic invoices also require recipient’s unique SDI code or PEC email in the header to route the invoice.
  Italian invoices often also include additional details like payment terms, transport document references, etc., but those are commercial, not mandated by VAT law.
• Simplified Invoices: Italy allows simplified invoices for amounts up to €400 (raised from €100 in 2019). A simplified invoice can omit some details: e.g. you can just put the customer’s tax code (no full address), a generic description of goods, etc. However, since e-invoicing, simplified invoices are less used (the XML still requires many fields). Italy implemented the EU rule that invoices ≤ €400 can be simplified, but in practice many small sales just go as receipts rather than invoices.
• Receipts (Cash Register Receipts): For retail (B2C) sales, an invoice is not mandatory if a “Documento Commerciale” (fiscal receipt from a certified cash register) is issued. As of 2020, Italy requires electronic “scontrino elettronico” – cash registers that transmit daily totals to the Agenzia Entrate. These receipts include store info, product, VAT, etc., but are not full invoices (customer name usually not on it). If a consumer requests an invoice, the retailer must issue one (and then such sale is removed from the daily aggregate to avoid double count). [E-Invoicin…s Overview | Word], [E-Invoicin…s Overview | Word]
  For VAT registered customers, they often want an invoice to deduct VAT. Actually, for expense VAT deduction, a “fattura” is required; a simple receipt isn’t enough unless it contains the buyer’s tax code and other elements (which receipts typically don’t). So businesses dealing even partly with B2B often issue invoices by default.
• Self-Billing (Autofattura): Italy allows self-billing arrangements where the customer issues the invoice on behalf of the supplier if both agree (common in agriculture or certain large company arrangements). The invoice must mention it’s self-billed. It still goes through SdI presumably with issuer and receiver flipped roles.
  Also, required self-invoices occur in certain cases: if a supplier fails to invoice by the 12th day of month following supply and the customer still hasn’t been charged VAT, the customer is supposed to issue an “autofattura per mancata fatturazione” (self-invoice for missed invoice, often called “spesometro self-invoice”) to report the purchase and account for VAT. Italy introduced a special electronic doc type (TD20/TD21) for these in SdI. Similarly, for purchases from non-residents, the Italian customer must issue a self-invoice (reverse charge invoice) to account for VAT, which from July 2022 must be transmitted via SdI (replacing the old Esterometro). [marosavat.com]
• E-invoice content differences: The XML format includes codes for nature of transaction (N1 for exempt, N2 for non-subject, etc.), the identification of split payment if applicable, etc. For example, sales to government entities subject to split payment must be marked so (the invoice shows VAT but says “split payment – art.17-ter” and the supplier doesn’t actually get the VAT paid; the public body pays it directly to treasury). [ey.com], [ey.com]
• Archiving and Retention: Invoices must be kept for at least 10 years. Italy has detailed rules for electronic archiving of invoices: [avalara.com], [avalara.com]
  • E-invoices on SdI are stored by the tax authority’s system, but businesses also must ensure proper conservation in a compliant e-archive. Electronic invoices must be archived in a manner that guarantees authenticity and integrity for 10 years. This requires a digital signature and timestamp on archive files, overseen by a responsabile della conservazione (responsible manager) and documented by a manuale di conservazione. The law requires the archiving process to be completed by 3 months after the annual tax return deadline of the year of invoices (practically 16+3 = ~July of next year). [avalara.com], [avalara.com] [avalara.com]
  • Paper invoices (for older or external transactions) should be kept in Italy or made available to authorities on request. Scanned copies can be used if Italy’s digital preservation rules are followed.
  • Failure in proper retention can lead to issues during audit (potential disallowance of deduction if purchase invoices missing).
• Credit and Debit Notes: If an invoice needs correction (e.g. price reduction, discount given after invoicing, goods returned or an error), Italy uses credit notes (nota di credito) and debit notes (nota di addebito). A credit note issued allows the supplier to reduce output VAT and the customer to reduce input VAT. Italy’s rule: a credit note for VAT adjustment must be issued within one year of the transaction if it’s due to an agreement between parties. For example, if a price adjustment is agreed months later, the supplier has up to one year to issue a credit note to adjust VAT. In case of a customer’s bankruptcy or insolvency, a credit note can be issued by the deadline of the annual return for the year the bankruptcy occurs. Outside these windows, recovering VAT might require other means (bad debt relief procedures, see later section). Debit notes are less common but used if under-billed originally – effectively just an additional invoice for the difference. [marosavat.com], [marosavat.com] [marosavat.com]
• Special Invoice Notations: Italian law requires certain notes on invoices in specific cases:
  • Reverse charge: “inversione contabile – art.17” and no VAT amount.
  • Split payment (if supplier to government entity): “scissione dei pagamenti – IVA a carico del committente art.17-ter DPR 633/72” indicating the customer will pay the VAT to treasury. [ey.com], [ey.com]
  • Second-hand goods margin scheme: a mention of the scheme (no VAT shown).
  • Travel agents margin scheme: mention of regime (“Regime del margine – agenzie di viaggio”).
  • etc.

• Italy requires periodic VAT calculations (monthly or quarterly) and an annual VAT return. Each period, the business offsets input VAT against output VAT and either remits the balance or carries a credit.
• Payment deadlines are typically by the 16th of the following month for monthly filers. Quarterly filers pay by the 16th of the month following quarter (with a 1% interest) or some deadlines like Q2 due Aug 20 in practice. [vatai.com], [vatai.com] [vatai.com]
• The annual VAT return (Declarazione IVA) is due by April 30 of the next year. It summarizes the year’s transactions and confirms the total liability or credit. [taxsummaries.pwc.com]
• If a refund is desired (because of excess input VAT), the taxpayer can request it annually (or quarterly if meeting conditions).
• Italy introduced pre-filled VAT return trials for some small taxpayers using the e-invoice data to make compliance easier. But for most, manual filing is still standard. [agenziaent…ate.gov.it], [marosavat.com]

• Deductible if for business use: The purchase must be made in the course of your business or professional activity and intended for transactions subject to VAT (or qualifying exempt with credit transactions like exports).
• No deduction for personal or non-business use: If an expense is purely private (not business-related), its VAT is not deductible. If mixed use, only the business portion is deductible.
• Timing of deduction: Italy changed its rule in 2017: Input VAT can be deducted by the earlier of the filing deadline of the return for the year of the invoice or actual filing of that return. In practice, you must deduct VAT at latest in the annual return of the year the VAT became chargeable. If you get an invoice in November 2025, you have until April 30, 2026 (the return deadline for 2025) to claim it. After that, you lose the right unless you do a late return adjustment. (This essentially gives a narrow window – many companies now ensure to book late-year invoices quickly to not miss out.) [marosavat.com], [marosavat.com] [marosavat.com]
• Documentary requirement: A valid invoice (or customs import document) is required to deduct VAT. Without an invoice meeting requirements, deduction can be denied.
• Reverse charge input: If under reverse charge, the self-invoice you issue is both output and input tax for you, so if fully business use you can deduct it simultaneously (essentially no cost).
• Pro-rata (Partial Exemption): If a business has both taxable and exempt activities (e.g. a bank that has VAT-exempt loan services and also some taxable consulting), it must apply a pro-rata ratio to its input VAT. For example, if 40% of its turnover is taxable and 60% exempt (no credit), generally only 40% of its mixed expenses’ VAT is deductible. Italy’s approach to pro-rata is currently a bit rigid (one general pro-rata for all inputs), but the 2025 reform aims to allow direct attribution where possible. Some inputs exclusively used for taxable output can be fully deducted even if overall company has exempt activities. The annual pro-rata percentage is computed and applied to that year’s input VAT. If pro-rata changes, an annual adjustment may be needed. [taxsummaries.pwc.com] [vatabout.com]
• Non-deductible VAT items: Italian law explicitly blocks or limits deduction on certain expenses, mostly to prevent abuse or reflect personal consumption:
  • Entertainment and representation expenses: VAT on hospitality, dinners, gifts, etc., is generally not deductible (0%), unless gifts are of modest value (≤ €50) in which case input VAT can be deducted. If it’s an event with promotional intent, that might or might not be considered representation – Italian law says business entertainment (client dinners, corporate events) have no VAT deduction. [marosavat.com], [marosavat.com]
  • Vehicles and related expenses: VAT on purchase, leasing, and running costs of cars is only 40% deductible in most cases. This recognizes that company cars are often partly for personal use. If a vehicle is used exclusively for business (like a truck or a car in a car-rental business), one can deduct 100%, but one must prove exclusive use. Otherwise, 40% is the max: e.g. VAT on fuel, maintenance, car purchase – only 40% recoverable for a typical company car. [marosavat.com], [marosavat.com] [marosavat.com]
  • Fuel for vehicles: falls under that same 40% rule if for passenger cars. For industrial vehicles or trucks used 100% in operations, 100% deductible.
  • Travel and accommodation: The VAT on hotel stays, meals, transport for business travel of employees is generally not deductible (0%) for the employer. This is an Italian quirk: many countries allow deduction for employee travel, but Italy does not (unless you re-invoice these costs to a client, then it’s part of your output and you can deduct under one interpretation). Train tickets, taxi fares, flight tickets often have no VAT or embedded VAT that’s not claimable, reinforcing this. So if an Italian company pays a hotel (with 10% VAT) for employee travel, that 10% is not recoverable. [marosavat.com], [marosavat.com]
  • Restaurant meals: As above, if it’s client dinner (entertainment) or employee travel meal, input VAT is non-deductible. If it’s meals for staff at canteen or business cafeteria, those might fall under fringe benefit rules (likely also non-deductible except minor amounts).
  • Mobile phones and telecom: Historically Italy allowed only 50% VAT deduction on cellphone bills, but I believe this was updated to align with demonstrating business use (if fully business phone, can deduct 100%, but usually considered 50% business, 50% personal by default). The general rule of proportionate business use applies.
  • Yachts, private aircraft: VAT on purchase/maintenance of pleasure boats, private planes is not deductible (unless one is in business of chartering them). Specifically blocked by law. [marosavat.com]
  • Uniforms/protective gear: fully deductible because purely business.
  • Office expenses, rent, equipment: fully deductible if used for taxable activities.
  • Goods given as free samples or gifts: if within allowed threshold or for business promo (like samples of low value or gifts to clients for advertising with company logo), Italy allows deduction (there’s an assumption these support taxable sales). But if gift is above threshold, might have to treat as supply and can’t deduct unless you self-charge VAT.
  • Italy’s law enumerates these limitations in Article 19-bis1 of DPR 633/72.

• Non-established supplier: As per EU law and Italian implementation, if a foreign supplier (not established in Italy) sells goods or services in Italy to a VAT-registered customer, the VAT obligations shift to the Italian customer. The Italian buyer issues a self-invoice (autofattura) and accounts for VAT (output and input simultaneously if fully deductible). This avoids forcing every foreign to register. For example, a German company installs machinery in Italy for an Italian factory – the Italian factory reverse charges the VAT. This is per Art. 17(2) of DPR 633/72 and covers both goods and services from non-established suppliers. The EY excerpt confirms this broad rule. Note: If the foreign supplier has an Italian VAT number (via rep or direct ID), they then issue an Italian invoice with VAT – reverse charge wouldn’t apply. [taxsummaries.pwc.com], [taxsummaries.pwc.com] [taxsummaries.pwc.com]
• Specific domestic sectors: Italy, with EU approval, applies reverse charge to certain high-fraud sectors:
  • Building and construction services: Subcontractors providing construction services to general contractors must reverse charge (the customer contractor self-accounts). This includes supply of labor in construction, certain installation services on buildings, etc. This was to fight missing trader fraud in construction. [marosavat.com], [marosavat.com]
  • Sale of scrap, waste, and recyclable materials: Reverse charged to the purchaser (common EU measure). [marosavat.com]
  • Supply of gold and pure silver: Investment gold is exempt, but industrial gold and pure silver sales are reverse-charged to prevent fraud.
  • Electronics: Sales of mobile phones, tablets, laptops, game consoles in B2B are reverse charged in Italy for large batches. Retail not, but wholesale yes. It applies when selling those goods to a tax-registered buyer, shifting the VAT to them. [marosavat.com], [marosavat.com]
  • Energy trading: Supply of gas and electricity certificates to resellers – reverse charge. [marosavat.com]
  • Emission allowances: reverse charge as well. [marosavat.com]
  • Services to PA under split payment: They use split payment rather than reverse, different mechanism, see next Notable section.
  • NEW (2022-2025): Italy extended reverse charge to certain logistics and transport subcontracting services to combat VAT evasion in that sector. That required EU authorization. [ey.com], [ey.com]
  • These domestic reverse charges are listed in Art. 17(6) of DPR 633/72. They all require an explicit mention on the invoice “reverse charge art.X” and no VAT. The customer then calculates VAT on their purchase and (if fully taxable) deducts it, net effect zero, but it prevents the supplier from charging VAT and disappearing without remittance.

• Cash Discounts: If a supplier offers a discount for prompt payment (e.g. 2% off if paid in 10 days), Italian VAT is computed on the final amount actually paid. The invoice can be issued for full amount with VAT, and if customer pays early the supplier must issue a credit note for the discount portion’s VAT or anticipate it. Commonly, invoices mention “2% discount for early payment not included” – if taken, the supplier will reduce a later invoice or credit note. The law says if a discount is conditional and not certain at time of sale, VAT is initially on full price; if the discount is taken, a credit note reduces the taxable amount and VAT accordingly.
• Trade Discounts (on invoice): If you give a line-item discount or overall discount at point of sale, just invoice net of discount, so less VAT charged outright.
• Year-end volume rebates: If negotiated after the fact (e.g. an annual bonus rebate for purchasing X volume), the supplier issues a credit note for that rebate with VAT, so the customer returns that portion of input VAT (or adjusts accordingly) and supplier reduces output VAT.
• Bad debts: See next bullet.

• If a customer doesn’t pay and is declared bankrupt or insolvent, the supplier can issue a credit note to reduce output VAT by the VAT on the unpaid amount. The credit note must be issued by the deadline of the VAT return for the year in which the bankruptcy proceeding allows recognition of the bad debt. Essentially, once it’s certain the debt won’t be paid (e.g. court declares bankruptcy), the supplier has until the next VAT return due date to adjust. If an invoice from 2024 is not paid and customer’s bankruptcy is declared in 2025, the supplier can issue a credit note by April 30, 2026, to recover that VAT. [marosavat.com], [marosavat.com] [marosavat.com]
• If it’s a case of a non-paying customer without formal insolvency, Italian law historically did not allow relief (you had to swallow the VAT or sue the customer). Recent changes under EU pressure allow an adjustment if the invoice remains unpaid for a long time (likely after legal enforcement attempts).
• If the parties agree to cancel the transaction or reduce price, then a credit note within one year of sale is allowed. [marosavat.com], [marosavat.com]
• The process: supplier issues credit note (with reference to original invoice, amount of VAT reversed) and can reduce their VAT payable in that period. The customer must then add output VAT on their side since originally they likely deducted VAT they never paid. The interplay ensures the state doesn’t lose VAT unless the customer is insolvent (in which case no one can pay it).
• In 2022 a Supreme Court ruling (Cassazione) reaffirmed that VAT neutrality means if it’s proven a sale has become definitively uncollectible, the supplier should be able to adjust VAT even outside the strict one-year rule. The 2025 reform might simplify and extend conditions for bad debt VAT recovery, aligning with EU principles of VAT only on amounts actually received.

• An importer can apply for a deferment license with a guarantee. If granted, they can defer import duties & VAT from say Jan 1–Jan 31 to a single payment by Feb 16 (end of next month). That’s one month extra time. [marosavat.com]
• Italy also allows those with certain AEO status or strong compliance to get a “plafond” if they are habitual exporters to import VAT-free up to a cap (the dichiarazione d’intento mechanism for exporters: frequent exporters can use a VAT plafond to not pay VAT on imports or local purchases up to their export turnover limit – effectively an exemption which then reduces their input credits accordingly).
• No import VAT in VAT return: Italy did not implement the optional Article 211 of the Directive for direct deferred accounting in returns (some voices calling for it, to improve cash flow).
• Impact: Many companies mitigate Italian import VAT by using bonded warehouses or having customer as importer. If one must import and pay, you can deduct that VAT on your next return (timing gap).

• Certain goods can be placed in a VAT warehouse after customs clearance (i.e., EU status goods but under suspension of VAT).
• While goods are inside the VAT warehouse, sales of those goods are not subject to VAT. VAT is due only when goods are withdrawn for consumption in Italy. [marosavat.com]
• This is used to avoid pre-financing VAT on inventory. For example, imported goods after paying duty can be transferred into a VAT warehouse – then subsequent sales while in warehouse (even domestic sales) can happen without VAT; the final buyer that takes them out does a reverse charge for VAT.
• There are restrictions on which goods qualify and anti-abuse measures. The warehouse keeper is jointly liable for VAT if things go awry. [marosavat.com], [marosavat.com]
• Non-EU goods can also be in “customs warehouses” (duty suspended) and if also designated as VAT warehouse, even domestic supplies in there are not taxed until removal.
• Italy also has VAT-free zones (like Trieste, Venice ports) where goods can be introduced and operations done with no VAT until they enter the Italian market. [marosavat.com]
• So, if you sell goods under the Deposito IVA regime, you would issue invoices with a note that VAT is suspended (no VAT charged) until withdrawal.

• If a foreign supplier transports goods to a stock in Italy for a known customer who will take title when needed (within 12 months), no Italian VAT on arrival and the foreign does not register. When the customer withdraws an item, the foreign supplier does a zero-rated intra-EU supply from their country and the Italian customer does an intra-EU acquisition. [marosavat.com], [marosavat.com]
• Italy aligned its law to this, removing the earlier requirement for immediate tax on transfer of goods to consignment. Now, if within 12 months the goods are taken by that customer, it’s taxed as acquisition at that point. If 12 months lapse or customer changes, then triggers a supply (and possibly foreign must register).
• This has simplified supply chains: many companies that used to register in Italy for consignment stock can now deregister and use call-off stock reporting (an Intrastat for call-off shipments must be filed).

• According to EU law (Art. 59a VAT Dir), member states can deviate for some services if normal rules lead to non-taxation or double tax. Italy applied use-and-enjoyment for short-term hiring of means of transport:
  • Short-term (<=30 days) rentals of vehicles to non-taxable customers: Normally taxed where vehicle is put at disposal (base rule). Italy’s use-and-enjoyment says if such service is used in Italy, it is taxable in Italy even if under base rule it might not be. Conversely, if use is outside Italy, not taxed. [marosavat.com], [marosavat.com]
  • Long-term leasing of vehicles to consumers: Base rule is taxed where consumer is (often that’s Italy if consumers in Italy). Italy’s use & enjoyment used to be for yachts or certain cases, but after 2020, Italy had to remove a controversial lump-sum use rule for yacht charters (they now require proof of outside EU use).
• Italy’s law lists service types with use/enjoyment overrides in Article 7-septies DPR 633/72. Primarily it’s transport means leasing as above. Possibly also telecommunications to non-taxable (if usage in Italy, Italy may tax even if provider outside). [marosavat.com], [marosavat.com]
• The gist: Italy can choose to tax a service that would otherwise be outside scope, if the service is effectively consumed in Italy. Or not tax one technically in scope if used abroad. However, Italy’s implementation is limited; they haven’t widely invoked it beyond vehicles.

• Capital goods (movable): e.g. machinery, with useful life 5 years – Italy has a 5-year adjustment period. If within 5 years the use ratio changes (taxable vs exempt use), they must adjust proportionally 1/5 of the VAT per year.
• Immovable property: e.g. building – adjustment period typically 10 years.
• That means if an entity initially was fully taxable and deducted all VAT on a machine, but two years later it becomes partly exempt, it may need to pay back some VAT via adjustment on its return for remaining years.
• This ensures long-term assets’ VAT deduction reflects actual use over time. Italian annual VAT return has sections for this “adjustment (variazione detrazione)”.
• If a capital asset is sold within the adjustment period and the sale is exempt (like selling a building without VAT after 3 years), they may need to adjust remaining years or possibly charge VAT on sale by opting to avoid adjustment.
• Italy’s specifics align with Art. 184-192 EU Dir.

• EU Businesses – 8th Directive Refund (EU VAT Refund System): An EU-established company with no Italian VAT registration can claim a refund of Italian IVA via an electronic portal in its home country (the “VAT Refund” system under Directive 2008/9/EC). The company submits a refund application by 30 September of the year following the refund period, specifying the Italian VAT amounts per invoice, the suppliers, VAT rates, etc. The home country forwards the claim to Italy. Italy’s Agenzia delle Entrate then processes and, if approved, refunds the VAT directly to the claimant’s bank account (in Euro). Key conditions: [agenziaent…ate.gov.it]
  • The claimant must not have a fixed establishment or VAT registration in Italy during the period. [agenziaent…ate.gov.it]
  • The expenses must be for business activities that would allow VAT deduction if done in Italy (so no refunds for blocked items like Italian hotel or restaurant VAT, or car fuel beyond 40%). Italy will reject those line items if non-deductible by Italian rules. [marosavat.com]
  • The claimant must be a taxable person in their own country (must supply a valid VAT certificate with application).
  • If the claimant had any exempt activities, only proportionate refund is allowed (they specify their deduction ratio).
  • Minimum claim thresholds: for a full year claim, at least €50; for shorter periods, €400.
  • Italy typically responds within ~4 months (can extend to 8). If Italy partially or fully rejects, the business can appeal via Italian courts.
• Non-EU Businesses – 13th Directive Refund: Companies from outside the EU can also reclaim Italian VAT via a special process (Directive 86/560/EEC), but only if there is reciprocal treatment for Italian companies in the claimant’s country. Italy’s reciprocity list currently includes Switzerland, Norway, Israel, and the UK. Businesses from these countries can apply for refunds of Italian VAT without needing to register locally. Conditions largely mirror those for EU businesses: no Italian establishment, business use of costs, no refund for disallowed items, etc.. Additional points: [agenziaent…ate.gov.it] [arlettipartners.com] [agenziaent…ate.gov.it], [agenziaent…ate.gov.it]
  • The claim is made by submitting Form VAT 79 (in Italian or English) by paper to the Italian tax office in Pescara by 30 June of the following year.
  • Original invoices or certified copies must be provided, plus a certificate of VAT status from the taxpayer’s home tax authority. [arlettipartners.com]
  • A fiscal representative in Italy is not required for these specific countries due to reciprocity. The foreign business can receive the refund directly. [agenziaent…ate.gov.it], [agenziaent…ate.gov.it]
  • If the foreign country requires an Italian business to appoint a local agent for refund, Italy may reciprocally demand the same. For example, until the recent agreement, UK businesses needed an Italian fiscal rep to get refunds post-Brexit; as of Feb 2024, that requirement was removed by the new UK-Italy agreement. [arlettipartners.com], [arlettipartners.com]
  • The processing time is around 6-12 months typically. Italy pays approved refunds by bank transfer (the claimant can specify an EU bank account).
  • If the non-EU country has no reciprocity, the business cannot use the refund scheme at all. The only way to recover would be if they had to register for VAT in Italy (and thus file returns to deduct input VAT). For example, a US company attending a fair in Italy faces Italian VAT on hotel and booth rental and cannot directly reclaim it since the US has no VAT (thus no reciprocity). Many will consider it a cost of doing business or try to avoid incurring Italian VAT (e.g. using EU intermediaries or if possible having Italian vendor zero-rate as export of service – often not possible). [agenziaent…ate.gov.it]
• Important Limitations:
  • The refund covers VAT on goods and services purchased in Italy or import VAT paid in Italy. [agenziaent…ate.gov.it]
  • No refund on Italian VAT that was wrongly charged (like if VAT was not due, e.g. a service that should be reverse charged but supplier charged VAT erroneously – that is supposed to be corrected by supplier via credit note, not through refund mechanism).
  • No refund if already VAT-registered in Italy: If a foreign business is doing enough in Italy to require registration, it cannot pick and choose refund for some costs and ignore others. The refund claim form asks for confirmation of no VAT registration.
  • Reciprocity nuances: The UK case: Italy and UK now have full reciprocity effective 2021, meaning UK businesses use the 13th Directive route and Italian businesses can get UK VAT refunds similarly. For other countries, e.g. Norway/Switzerland, Italy has long-standing agreements (since 2000 and 1997 respectively). USA – no VAT so no reciprocity, hence US companies can’t claim Italian VAT (commonly cited frustration). [arlettipartners.com] [arlettipartners.com], [arlettipartners.com]
  • If a non-EU business has joined the OSS/IOSS schemes, Italy explicitly allows them access to refunds even if not established (because they consider OSS participants as having quasi-reciprocity). [agenziaent…ate.gov.it], [agenziaent…ate.gov.it]
  • The applicant’s activities must be taxable in their home country. If they are exempt or non-taxable at home, Italy can proportionally reduce or deny (e.g. a non-profit with no taxable activity cannot reclaim foreign VAT normally).
• Procedure and Outcome: If approved, the refunded VAT is paid without Italian interest (Italy doesn’t add interest for timely processed claims). If significantly delayed beyond the legal timeframe, the claimant could argue for interest. Denials can be appealed via an Italian tax court within 60 days of refusal.
• Common uses: Foreign businesses reclaiming Italian VAT often include: trade show exhibitors reclaiming VAT on event costs, vehicle manufacturers reclaiming test-driving fuel VAT, foreign retailers reclaiming VAT on Italian wholesale stock purchases (though if goods were exported, they should not have had Italian VAT in first place – they’d use 0% intra-EU supply or export).

• B2C Digital Services: Since 2015, electronically supplied services (e.g. streaming, downloads, SaaS to consumers) are taxed where the customer is located (customer’s Member State). Thus, Italian VAT is due on digital services provided to Italian private consumers, even if the supplier is foreign. To simplify compliance, the EU introduced the Mini One Stop Shop (MOSS) in 2015, expanded to the One Stop Shop (OSS) in July 2021. Italy is part of the OSS system:
  • An EU business providing digital services to consumers in multiple EU countries can register for OSS in its home country and report Italian VAT through that OSS return, instead of registering in Italy. The OSS (Non-Union scheme) is similarly available for non-EU companies (they can pick an EU country to register and report all EU consumer digital sales).
  • Therefore, most non-Italian providers of digital services to Italian consumers will NOT be individually Italian VAT-registered – they use OSS. Italian VAT (22%) is charged on things like app purchases, streaming subscriptions, etc., but the foreign supplier remits it via OSS.
  • If a digital service provider opts not to use OSS (rare, since it’s easier to use it), they would have to register in each country including Italy once they have any Italian B2C sales (there’s a very small threshold of €10,000 EU-wide under which microbusinesses could optionally tax at home, but beyond that, place of supply shifts).
  • Example: A US software company selling online game subscriptions to Italian individuals adds 22% Italian VAT to those sales (because place of supply = Italy) and likely uses a fiscal intermediary or the Non-Union OSS (maybe registered in Ireland) to remit that Italian VAT. The Italian consumer pays price VAT-included, but the US firm doesn’t need an Italian VAT number as long as OSS covers it.
• B2B Digital Services: If an Italian business purchases digital services (e.g. cloud storage) from a foreign provider, the reverse-charge B2B general rule applies. The service is taxed where the business customer is established, so in Italy, but the Italian business must self-account for the VAT (reverse charge). The foreign digital supplier doesn’t charge Italian VAT if the client gives a VAT number. The Italian recipient does not pay VAT to supplier, but instead accrues output VAT and (if fully taxable) deducts it. [marosavat.com]
  • Italian companies are well accustomed to reverse charging things like software licenses from abroad. They must ensure to do the integration/autofattura for these or risk undeclared VAT if audited (though e-services often come with no physical invoice to Italian SdI, so less immediate oversight, but still required by law).
  • If the foreign supplier mistakenly charges local VAT (like their country’s VAT) erroneously, the Italian business cannot deduct foreign VAT; they’d need a correction or might lose that VAT.
• Italian Digital Services Provided Internationally: If an Italian company sells digital services to:
  • EU consumers outside Italy: they must charge VAT of the consumer’s country and typically use OSS (Union scheme in Italy) to report it. For instance, an Italian e-learning platform selling to France must charge French VAT (20%) and remit via OSS. Italy’s OSS portal would handle sending that to France.
  • Non-EU consumers (B2C outside EU): those are out of scope of EU VAT (considered exported services) – Italian VAT not charged. E.g. Italian app developer selling to US customers doesn’t add IVA.
  • EU business customers: place is customer’s country, but by B2B rule the Italian doesn’t charge Italian VAT; instead the foreign business self-assesses in their country (if EU) or it’s out-of-scope if the business is outside EU.
  • Non-EU business customers: B2B rule, Italy looks to where customer is – if customer is outside EU, service is outside scope of EU VAT entirely. So no Italian VAT.
• Electronically Supplied Services definition: includes services delivered over the internet or an electronic network with minimal human intervention – e.g. streaming video/music, downloads, e-books, online gaming, cloud services, software SaaS, online advertising, etc.
  • Italy’s rules align with EU Implementing Reg. 282/2011 definitions and the special schemes used.
  • Telecommunication and broadcasting (like phone calls, satellite TV) are also taxed where consumer is, using OSS if cross-border.
• One Stop Shop participation in Italy: Italy’s Agenzia Entrate runs the OSS for Italy. Many Italian businesses providing cross-border B2C services or goods have enrolled. The OSS returns are quarterly and separate from the domestic VAT return.
  • Non-EU businesses can register for OSS in any Member State (commonly they choose the first they supply to, or one convenient like Ireland or Luxembourg). If a non-EU business chooses Italy as their OSS Member State (less common due to language), they could do so and then file an OSS return to Italy for all EU B2C digital sales.
• Digital marketplaces and VAT: Another aspect of “VAT on digital services” – since 2021, marketplaces facilitating digital service supplies might have some deemed supplier roles for VAT if non-EU seller to EU consumer via marketplace. But that mostly applies to goods (IOSS for goods <€150 where marketplace may collect VAT). For pure digital service marketplaces, the platform might need to either report under OSS or have the sellers do it; not a specific Italy rule but an EU one concept if marketplace acts as undisclosed intermediary.
• Italian Digital Services Tax (DST): Note, separate from VAT, Italy has a Digital Services Tax (3%) on certain large digital company revenues. But that is not a VAT and outside the scope of this guide. It’s a corporate tax measure; Italian DST does not affect VAT, and standard VAT still applies to those transactions.

• Prior to July 2021, the Italian distance selling threshold for foreign EU sellers sending goods to Italian consumers was €35,000 per year. If an EU company’s B2C sales into Italy exceeded €35k, they had to register for IVA in Italy and charge Italian VAT. Similarly, Italian companies had to monitor thresholds in other member states (e.g. €35k or €100k depending on country).
• For example, an Italian online retailer selling to Germany: if over €100k to Germany, had to VAT register in Germany.
• If below threshold, they could charge Italian VAT and treat as domestic supply.

• The individual country thresholds (like Italy’s €35k) were abolished. Now if an EU business sells more than €10,000 per year in total to all other EU countries (excluding its home country), it must charge VAT in the destination country on those supplies. Below that, it can opt to just charge home VAT. [sme-vat-ru….europa.eu], [sme-vat-ru….europa.eu]
• To avoid multiple registrations, the OSS Union scheme was extended to distance sales of goods. Italian businesses making distance sales to EU consumers can report foreign VAT via OSS (in their Italian OSS return), and foreign EU businesses selling to Italy can use their home OSS to remit Italian VAT to Italy.
• For non-EU sellers selling goods to EU consumers, a new Import One Stop Shop (IOSS) scheme was created for imports ≤€150 to charge VAT at sale and avoid import VAT on arrival. For imports above €150, normal import VAT applies but often the courier collects it from consumer.

• Incoming distance sales (EU to Italy): If a French, German, etc. company sells goods online to Italian consumers, they no longer need an Italian VAT registration once they cross €35k. Instead, they likely use OSS in their country to charge Italian VAT (22%) on those sales and remit it. Thus, many foreign companies deregistered their Italian VAT numbers in 2021 and moved to OSS. Italian VAT still gets collected (through OSS).
• The €10,000 threshold is EU-wide and very low, effectively forcing most sellers into OSS unless extremely small. It only applies if the seller is EU-based and sells under €10k total to all EU outside their own country AND chooses to keep home VAT; many just opt into OSS from first sale to avoid tracking threshold.
• If an EU seller below €10k decides not to use OSS, they charge their home country VAT to all EU consumers. But if Italian consumers buy from such a seller, they’d be paying foreign VAT (e.g. 19% German VAT instead of 22% IVA) – such situations are allowed only under threshold and small value.
• Outgoing distance sales (Italy to EU): Italian online retailers shipping to consumers in other EU states similarly now use OSS. They charge the customer’s VAT rate – e.g. 20% France, 21% Spain, etc. – and then file a quarterly OSS return in Italy listing the VAT due to each country. The Agenzia Entrate then transfers those amounts to the respective countries. No need for Italian sellers to register in each country. If an Italian seller’s total cross-border B2C sales are under €10k, they can opt to keep charging Italian VAT (22%) on those foreign sales. If they exceed, OSS is the typical route.
• Non-EU distance sellers (direct imports to Italy): For goods coming from outside EU sold directly to Italian consumers (like via AliExpress, Amazon global, etc.), the EU made marketplaces liable in certain cases and created IOSS:
  • If the seller uses IOSS, they collect Italian VAT at point of sale (display price VAT-inclusive), charge say 22%, and give it through IOSS to Italy. The package then is customs-cleared free of VAT (just needs an IOSS ID in documentation).
  • If not using IOSS, then the consumer or agent pays import VAT in Italy upon delivery (plus any duties).
  • Italy works with parcel couriers and Post to ensure VAT on imports is collected (the de minimis €22 exemption was removed).
  • Major e-marketplaces (Amazon, eBay) have generally opted to handle VAT either by acting as deemed supplier (charging Italian VAT at sale for shipments ≤€150 from non-EU sellers) or ensuring the sellers use IOSS. Italy receives these VAT via the IOSS system from the intermediary’s country of IOSS registration.
• VAT rate for distance sales to Italy: Always Italy’s standard rate (22%) unless it’s goods eligible for reduced rates. If a foreign seller sells a reduced-rated item (like a book at 4%), they must apply Italy’s 4% if shipping to Italy. The OSS system allows multiple rate categories per country.
• Intrastat threshold: Italy historically required an Intrastat declaration for dispatches once yearly threshold €50,000 in sales to EU. Under OSS, distance sales no longer reported in Intrastat (the OSS covers them). Actually, as of mid-2021, intrastat for B2C deliveries is not required – only B2B trade is in Intrastat.
• Domestic distance selling: Possibly they also might hint at domestic distance sales (like within Italy, which is just normal VAT, no threshold).

• VAT Registered Cash Tills (Registratori Telematici): all Italian B2C sales must be recorded through approved cash registers that send daily sales to the tax authorities (this replaced manual receipt books). For distance sales, however, an invoice or OSS documentation suffices; they are not rung through a cash register.
• If an Italian company sells online to Italian customers, they usually issue an invoice or receipt and also count in their corrispettivi (daily receipts) if not invoicing each sale.

• Eligibility: It is available to businesses with an annual turnover of up to €2 million. Both goods and service providers (in the exercise of enterprise, arts or professions) can opt in. It’s not limited to a specific sector – any VAT-registered person under the threshold can choose it. (This threshold is relatively high; it covers a large majority of SMEs.) [agenziaent…ate.gov.it]
• How to Opt In: The scheme is optional. A taxpayer opts in by indicating the choice in the first VAT return of the year in which they want to apply it or by a specific communication. Once opted in, the regime is binding until they opt out (minimum one year). They must apply it to all transactions. On invoices, they should note “IVA per cassa – art. 32-bis DL 83/2012” to inform customers that VAT is payable on a cash basis.
• Operation – Output VAT: For a supplier on cash accounting, output VAT becomes payable to the state only when the customer pays (in whole or in part). If the customer pays partially, VAT on that paid portion is due in that period. If the customer never pays, the output VAT can be deferred up to a certain time limit (see next bullet). Importantly, the issuance of the invoice does not immediately create a tax liability (unlike normal rules) – the tax is suspended until payment is received. [agenziaent…ate.gov.it]
• Operation – Input VAT: Similarly, the business can only deduct input VAT when it actually pays its suppliers. So no deduction just from receiving an invoice; they must have paid that invoice. This aligns the cash flows – you don’t claim VAT credit until you’ve parted with money. [agenziaent…ate.gov.it]
• One-Year Time Limit: Under the Italian scheme, after 12 months from the invoice date, any still-unpaid sale or purchase is treated as if paid. That is, output VAT becomes due at the 12-month mark regardless of non-payment (unless the customer has gone bankrupt in that time); and any input VAT not yet paid to supplier becomes deductible at the one-year mark. The one-year rule prevents indefinite deferral. If within that period the customer enters insolvency proceedings, the VAT remains deferred until the procedure’s conclusion or earlier payment. [agenziaent…ate.gov.it], [agenziaent…ate.gov.it] [agenziaent…ate.gov.it]
• Exclusions:
  • Sales to private consumers cannot be cash-accounted – the regime is only for business-to-business transactions where the customer is also VAT-registered and aware of the scheme. Actually, by law, output VAT deferral applies also to B2C sales, but since consumers don’t charge themselves VAT, the main difference is the supplier must still by 12 months remit it even if unpaid. The bigger issue is input VAT on purchases from suppliers not in scheme: those aren’t deferred just because the purchaser is in scheme (the scheme doesn’t affect supplier’s obligation to pay).
  • Customers on cash accounting: If a customer under cash accounting buys from a normal supplier, the supplier still pays VAT immediately (unless supplier on scheme too). But the customer can’t deduct until they pay – that’s fine. If both supplier and customer are on the scheme, the supplier only pays once received, the customer only deducts once paid – which coincide (it’s symmetrical).
  • If a taxpayer in the scheme sells to a larger company that is on normal accrual, that purchaser cannot deduct VAT until they have the invoice (and under normal rules they could deduct on invoice issuance even if not paid). But since the supplier’s invoice is marked “IVA per cassa,” Italian law forces the buyer to also defer deduction until payment (to avoid a cash-flow mismatch). Indeed, Article 32-bis says the purchaser of an invoice issued under cash accounting cannot deduct that VAT until they pay the invoice. This ensures parity – the tax isn’t collected yet, so the buyer shouldn’t claim it yet. [agenziaent…ate.gov.it]
• Advantages: It improves cash flow for small businesses by delaying VAT payment on their sales until they actually have the cash. It also prevents them from having to finance VAT out of pocket if customers are slow to pay. On the flip side, it delays when they can reclaim VAT on purchases, which is a slight disadvantage if they make large purchases they haven’t paid yet. But generally, for working capital, businesses often prefer not to pay VAT on sales they haven’t been paid for.
• Comparison to Standard Regime: Under standard VAT, if you invoice a client net €1000 + €220 VAT in January, you owe €220 by mid-Feb even if client pays you in April (unless you do later adjustments for bad debt). Under cash accounting, you won’t owe that €220 until client pays in April (or Jan next year at latest). Meanwhile, if you received an invoice from a supplier for €1220 in January but didn’t pay them until April, normally you could claim the €220 in Jan return (timely invoice), but under cash scheme you must wait until you pay in April to claim that €220 input. So it aligns outflows/inflows of VAT with actual cash movements. [agenziaent…ate.gov.it]
• Uptake: Many small firms use it, though some opt out if they usually are net VAT refunders (like exporters) because it would delay their refund claims. If you’re usually in excess credit (more input VAT), cash accounting could harm cash flow (since you’d wait to claim input). So it’s beneficial mainly for those who have to pay net VAT regularly and face slow-paying clients.
• Leaving the scheme: If turnover exceeds €2 million, the scheme automatically ceases from next year. A taxpayer can voluntarily opt out starting a new year if they prefer accrual. When leaving, any still-unpaid invoices must be handled (I believe if they leave, any open items would then get settled in the last cash-return or immediate after leaving). Typically they’d issue a final calculation to bring everything into account.
• Example: An eligible Italian consultant opts for IVA per cassa. In March, issues an invoice €10,000 + €2,200 VAT to a client. Client pays only in July. The consultant, under cash accounting, will not include the €2,200 output tax in the March/April VAT calculation; they will report it in July (or Q3 if quarterly). If by next March the client still hadn’t paid (12 months later), the consultant would have to declare it then regardless. Conversely, the consultant had a subcontractor who billed them €5,000+€1,100 VAT in March, which the consultant will only pay in August – the consultant waits until August to deduct €1,100 input VAT. Both sides mirror actual payment schedule.
• Interaction with Payment Terms: The scheme encourages shorter payment terms – the quicker you get paid, the quicker you owe VAT but also get the money. If a client never pays for a year, you still end up paying VAT after 1 year – but at least you had a year grace. Also, specific note: if the client is a large company, those often do not want their VAT deduction delayed, so they might insist the small supplier not use cash accounting (some might even avoid dealing with suppliers in the scheme to not complicate their input VAT timing – though it’s legally fine, just delays their deduction). But since Italian law compels buyer to wait if supplier uses it, large companies might just accept since it’s law.
• Not to confuse with actual cash receipts / retail scheme: Italy’s cash accounting is not automatic for all retail or cash businesses – a grocery store still accounts on sales even if paid cash immediately anyway. The scheme is specifically an optional regime one must declare.

• Obbligo di Certificazione dei Corrispettivi: Businesses that make cash sales (B2C sales where no invoice is issued) must issue a fiscal receipt and electronically report daily takings. Historically, this was done via either handwritten receipt books or certified cash registers (registratori di cassa fiscali). Since 1 July 2019 (for large retailers) and 1 January 2020 (for all retailers), Italy introduced telematic cash registers, known as “Registratori Telematici (RT)”. [E-Invoicin…s Overview | Word], [E-Invoicin…s Overview | Word]
• Telematic Cash Registers: These are point-of-sale devices approved by the tax authority that automatically transmit daily sales data (corrispettivi) to the Agenzia delle Entrate.
  • Each day’s total VAT breakdown (by rate) is sent in an encrypted file to the tax authority’s server through an internet connection. This replaces the old requirement of physically printing a “Z-report” and storing it or mailing periodic summaries. [E-Invoicin…s Overview | Word]
  • The RT issues a customer receipt called “Documento Commerciale” (which replaced the old “scontrino fiscale”). This receipt contains store info, items, and QR code referencing the transmitted data.
  • The data transmission must occur by the 12th day of the following month at latest (originally daily or within 5 days, currently extended to 12 days, similar to e-invoice windows). In practice, most RT devices send at least a report at day’s end or soon after.
• Who Must Use: Virtually all retailers, restaurants, bars, taxis, and any business accepting cash/card from consumers for goods or services must have an RT. Some exceptions:
  • Very small villages or if technology fails, they can issue a handwritten receipt and later upload via an online portal.
  • Some services (e.g. certain crafts, street markets) had exemptions but many of those were removed or had to adopt portable RT or use a new smart receipt app.
• Purpose: This system ensures real-time capture of B2C sales, reducing underreporting. It complements the e-invoicing system which covers B2B. Now tax authorities have a near-complete picture: e-invoices for B2B, and RT daily flows for B2C.
• VAT Compliance at POS:
  • Each sale, the register applies the proper VAT rate (22%, or 10%, 4% for applicable items) and prints it on the receipt.
  • At day’s end, the register totals sales by VAT rate, and that is what gets transmitted. Businesses still must summarize those in their VAT books, but many software solutions now integrate with RT data.
  • Customers can get a receipt and optionally request an invoice (some might for warranty or other reasons; if an invoice is issued on the spot, that invoice would supersede the simplified receipt and the sale is accounted via invoice method).
  • Italy also introduced a Lottery of Receipts (“Lotteria degli scontrini”) to incentivize consumers to ask for receipts – each receipt’s QR code can be entered in a national lottery.
• Penalties: If a business fails to issue a receipt (or transmit data), they face fines (and historically, risk of closure for repeated violations). With digital systems, the absence of a transmission is easily flagged. The system logs missing days and the Agenzia can follow up.
• Integration with VAT returns: Starting 2021, Italy began offering pre-filled VAT registers and draft returns to some businesses, based on the e-invoice and RT data it has. This is a unique feature: for eligible small businesses, the tax authority can propose their VAT figures since it saw everything they sold (via e-invoices & RT receipts) and much of what they purchased (via e-invoices from suppliers). This shows how crucial capturing all POS data is for future simplification. [agenziaent…ate.gov.it], [marosavat.com]
• Exceptions:
  • Some categories (like manual artisans working in homes – e.g. plumbers — they have alternative modes; actually plumbers typically must either give receipt or invoice – many produce invoice because the client might be able to deduct some building renovation VAT).
  • Online sales to Italian consumers: if payment is electronic and sale is done by shipping goods, these often are documented by an invoice or a simplified electronic receipt from the e-commerce system. If an Italian e-commerce sells to Italian consumers, they are allowed to issue a non-fiscal receipt (because the sale is already recorded via their system and shipping docs, and they have proof of transaction through payment records). The law gave an exclusion for sales documented by other means like an invoice or bills of lading.
• Software and devices: Businesses had to upgrade to new telematic registers or update old registers with a “black box” for connectivity. The government offered tax credits for buying new RT machines to ease the transition in 2019/2020.

• Standard Assessment Period: The Agenzia delle Entrate can issue a VAT assessment by December 31 of the fifth year following the year in which the annual VAT return was filed. In other words, a VAT return for 2020 (due April 2021) can be audited and assessed until December 31, 2026. This is a 5-year statute counting from the year after the return deadline. If the return is filed late (e.g. filed in 2022 for 2020), the clock still usually starts from the statutory deadline year. [marosavat.com], [marosavat.com]
• If No Return Filed or Fraud: If the taxpayer fails to file a VAT return for a year, or if a return is deemed fraudulent, the statute of limitations is extended. In cases of omitted return, Italy effectively has 7 years or more:
  • Historically, if no return, the deadline was Dec 31 of the seventh year following the tax year. Some recent changes might have extended to eighth year in certain circumstances.
  • For fraudulent activity, criminal proceedings can also extend timelines. [marosavat.com], [marosavat.com]
• Interruptions: Certain actions can interrupt or extend the limitation period. For instance, if the taxpayer requests a ruling or if there’s a mutual agreement procedure, those might pause the clock.
• Record Keeping: Italy requires taxpayers to keep VAT records (invoices, ledgers) for 10 years, which actually exceeds the 5-year assessment period. This is aligned with general civil code obligations for accounting records (10-year retention). It’s advisable because if an assessment is raised in year 5 for an earlier year, you still must have the documents to defend yourself. Also, certain issues (like offsetting losses or credits) can have longer interplay. [avalara.com], [avalara.com]
• After limitation passes: Once the statute period lapses, the tax authority can no longer legally issue assessments for that period’s VAT (unless they claim fraud discovered late, which might invoke other legal avenues). The taxpayer is considered in the clear for that year’s VAT obligations, and any refund claims by the taxpayer also generally cannot be made (the taxpayer has similar time frames to claim additional refunds, usually the same timeframe or shorter for corrections).
• Special cases:
  • If a taxpayer filed a return showing a credit and wants to carry that credit forward or apply for a refund, the right to that credit typically remains until offset or refunded; but if the authority doubted its validity, they’d have to challenge within the 5-year window.
  • Italy often does integrate audits – they might audit 2019 return in 2022, if they find issues they can issue act by end of 2024 (5th year: 2019 return filed April 2020, so until Dec 2025 actually).
  • If a taxpayer corrects a past return (ravvedimento operoso) and pays differences, that doesn’t extend the period for authority, it’s just self-adjustment within allowed time.
• Penalties scope: If they find underpaid VAT after the period, they cannot assess it. But if a return was not filed at all (and they somehow find out after 5 years), they might try under extended period or consider criminal prosecution if it’s a large amount and within criminal statutes.
• Extension due to COVID: Italy at times extended deadlines for certain tax matters due to COVID, but not sure if that applied to statute. Possibly they extended the year 2015/2016 deadlines by a few months. But generically it’s 5 and 7.
• Mutual assistance in EU: If another EU country finds a problem affecting Italy near the end of period, Italy can act as long as within its 5-year rule. The EU directive urges countries to have at least 5-year records.

• If return filed by April 2017, Italy could assess until Dec 31, 2022.
• If no return for 2016, they could assess until Dec 31, 2023 (7th year after 2016). Note new rules in 2016 extended by one year starting from 2017 returns? Actually, Italy changed to allow an extra year for omitted:
• For 2017 onward, omitted returns are assessable up to 8th year end. I need to confirm but likely: Return 2017 filed 2018 -> assess until 2024; if no return 2017 -> assess until 2025.
• VAT fraud detection: Italy’s use of e-invoicing and RT receipts drastically reduces undetected issues, so often audits come within 1-3 years now. But statute sets the legal cap.

• Tax Period: The VAT tax period in Italy is generally monthly. However, smaller taxpayers are allowed to file and pay quarterly. The criterion: [vatai.com]
  • If annual turnover in the previous year did not exceed €400,000 for services or €700,000 for goods (or €700k for mixed), the taxpayer qualifies as a “trimestre” (quarterly) filer. [vatai.com]
  • Those above these thresholds must file monthly.
  • Option: A qualifying business can still choose to file monthly if they prefer.
  • Quarterly filers must pay a small interest surcharge of 1% on the VAT due for each quarterly payment (to compensate the delay vs monthly). [vatai.com], [vatai.com]
• Periodic Payment Deadlines:
  • Monthly Filers: must compute VAT for each calendar month and pay any VAT due by the 16th of the following month. For example, VAT for March is due by April 16. [vatai.com]
  • Quarterly Filers: pay VAT for Q1 (Jan–Mar) by May 16, Q2 (Apr–Jun) by Aug 16 (though often extended to Aug 20 due to holidays), Q3 (Jul–Sep) by Nov 16, and Q4 (Oct–Dec) is not paid quarterly but settled in the annual return (or you can opt to make an advance in Q4). [vatai.com]
  • Actually, implementing specifics: Q2 deadline is often extended to Aug 20 by law; indeed [6] shows Q2: August 20. So Italy gives more time for second quarter. [vatai.com]
  • Payment is made via the F24 payment form (a unified tax payment slip) electronically.
• Periodic Returns/Reports: Traditionally, Italy did not require a monthly/quarterly “VAT return” form to be submitted (only the annual). Instead, since 2017, taxpayers submit a “LIPE” – Comunicazione Liquidazioni Periodiche IVA. This is a quarterly VAT summary report (even for monthly payers, they aggregate months into quarter for this report) listing the total sales, purchases, and VAT due/credit for each period. The LIPE is due by the end of the second month after each quarter (e.g. Q1 LIPE by May 31, Q2 by Aug 31, Q3 by Nov 30, Q4 by end of Feb) and is filed online. LIPE doesn’t require payment (that’s via F24 separately), it’s an informational filing to allow the tax authority to know the periodic calculations.
  • If a taxpayer fails to file LIPE in time, penalties apply, though moderate.
  • Italy introduced LIPE to reduce the gap between paying and the authority seeing the data (since annual return is much later).
  • With e-invoicing, some have murmured to eliminate LIPE (as they practically know your VAT), but as of 2026 it’s still required.
• Annual VAT Return: All VAT-registered persons must file an Annual VAT Return (Dichiarazione Annuale IVA).
  • The return is due by April 30 of the year following the tax year (e.g. 2025 return for 2024 by 30 Apr 2025). It’s filed electronically (via Entratel). [taxsummaries.pwc.com]
  • It is a comprehensive declaration of all VAT operations of the year: total outputs by rate, total inputs, any pro-rata calc, payments made, etc.
  • It reconciles the periodic payments with final liability. If the taxpayer underpaid via periods, they pay a balance by the return deadline. If they overpaid (or had excess credit), they can either request a refund or carry it forward.
  • The annual return must be filed even if no activity occurred (nil return) by those with an active VAT number (unless in closing process).
  • Non-resident companies with a fiscal rep or direct ID also file annual returns in Italy.
  • Italy separated the annual VAT return from the general income tax return (Unico) – it is filed on its own timeline (Apr 30) as opposed to income tax return in Sept.
• VAT Payments: Annual Balance vs Installments:
  • If the annual return shows a remaining VAT due for the year (perhaps because Q4 had a lot of sales beyond the others), that “balance” is due by March 16 of the following year (which aligns with income tax balance deadline). [vatai.com]
    • Taxpayers can instead choose to pay the VAT balance in up to 9 monthly installments from March to November of that year, with a slight interest (0.33% per month). This is an Italian peculiarity: they allow spreading the annual settlement. [vatai.com]
    • Corporate taxpayers often offset the balance against other tax credits or withholdings via F24.
  • Example: An Italian co’s annual return shows €12,000 due. It can pay €12k on March 16, or €12k + small interest split into 9 payments March–Nov.
  • If a taxpayer expects a refund but also needs to make an advance for next year’s first quarter, they often offset these via F24.
• Handling VAT Credits/Refunds: If the annual return shows a VAT credit (input VAT exceeded output VAT for the year), the taxpayer has options:
  • Carry Forward the credit to use against future VAT liabilities (most common).
  • Request a Cash Refund: possible if certain conditions are met (e.g. the credit ≥ €2,582.28 and one of a set of criteria: taxpayer mainly zero-rated exporter, or credit over 10% of outputs, etc.). Without criteria, they might still refund smaller amounts but generally must have some justification (like the credit comes from high investment purchases).
  • Italy requires a bank guarantee or insurance if refund exceeds €30,000, unless the taxpayer has a VAT reliability score or certain compliance track (recent rules exempt solid taxpayers from guarantee up to certain threshold). [marosavat.com]
  • Refund claims are made on the annual return itself (Quadro VX) or quarterly via separate VAT refund application (the “TR” form) if requesting quarterly refunds (for exporters).
  • The tax office should pay approved refunds within a few months (though historically sometimes longer).
  • Many businesses simply carry credit forward to offset next year’s VAT or other taxes on F24 (allowed to offset against other taxes up to certain limits without guarantee, currently ~€2 million limit for free offset).
• Pre-filled return initiative: Starting with 2021 data, Italy began providing some pre-populated VAT returns for small taxpayers by using their e-invoice and receipt data. These are optional; taxpayers can accept or modify them. It’s part of easing compliance in future. [marosavat.com], [marosavat.com]
• Non-Resident Filing Specifics:
  • A non-resident with an Italian VAT registration (through fiscal rep or direct ID) must comply the same: file quarterly LIPE and file the annual VAT return via their representative by April 30.
  • The fiscal rep is responsible for doing these filings on behalf of the foreign company.
  • Non-residents cannot use Italy’s OSS for their Italian sales – OSS covers cross-border to other countries; for goods warehoused in Italy and sold domestically, standard Italian VAT returns apply via rep.
  • If a non-EU business sells only via OSS/IOSS, they have no Italian VAT registration and thus no Italian return obligations – their consumption VAT is handled in the OSS context.
• Other Filings (to be expanded in next section): In addition to returns, Italian VAT law requires:
  • Annual Communication of VAT Data (this was replaced by just filing the annual return by end Feb in recent years, now obsolete).
  • Esterometro (Transactions with foreign) – until 2022, quarterly listing of cross-border invoices not on SdI. As of July 2022, replaced by sending those through SdI or doing a self-invoice for imports. So Esterometro abolished from 2022.
  • Intrastat – monthly or quarterly listing of EU sales/purchases of goods and certain services.
  • These will be detailed in “Other Filings” section.
• Penalties for Late Filing or Payment:
  • Late periodic payment: interest (~4% annual) plus penalties 1.5% per month of delay up to 15% (if paid within 90 days) or 30% if beyond 90 days late.
  • Late annual return: penalties from €250 up to 240% of VAT due (if tax due) – heavy if unfiled because that’s considered like omitted return.
  • However, Italy’s Ravvedimento Operoso allows self-correction: if a taxpayer files late or pays late voluntarily, penalties are reduced (to 1/10th or 1/8th).
  • For non-residents, the rep is on hook for penalties if they default.

• Esterometro (Cross-Border Transaction Report): (Note: This requirement was eliminated from July 2022, but worth explaining historically for completeness.)
  From 2019 to June 2022, Italy required a quarterly report called the “Esterometro” which listed all transactions with foreign counterparties that were not already captured by the domestic e-invoicing system. This included: [marosavat.com], [marosavat.com]
  • Sales of goods/services from Italy to non-Italian customers (if no e-invoice was issued, e.g. B2B EU supply or export where invoice was outside SdI).
  • Purchases of goods/services by Italian taxpayers from foreign suppliers (both EU and non-EU) where no e-invoice existed. The Esterometro had to be submitted by the end of the month following each quarter. It was essentially Italy’s way to track cross-border flows not in its e-invoice network.
    As of 1 July 2022, Italy abolished the Esterometro. Instead, taxpayers must send each foreign invoice through the SdI platform as a specific communication:
  • For sales to foreign clients: they can issue an electronic invoice in FatturaPA format (using a special recipient code “XXXXXXX” for foreign). [E-Invoicin…s Overview | Word]
  • For purchases from foreign suppliers: they must transmit a self-invoice (autofattura) or integration via SdI (using document type code TD17, TD18, TD19 for various scenarios). This effectively replaces the need for a separate report. Thus now Italy captures cross-border transactions in near real-time too. The Esterometro is no longer required from Q3 2022 onward. [E-Invoicin…s Overview | Word]
• Intrastat (EU Sales and Purchase List): Italy, like all EU states, requires Intrastat declarations for intra-EU trade:
  • Intrastat Outbound (Cessioni intracomunitarie): A monthly (or quarterly for small volumes) list of sales of goods to VAT-registered customers in other EU countries, and certain services provided cross-border to EU businesses. It shows the customer VAT ID, value of goods, commodity codes, etc. Frequency:
    • Monthly Intrastat if intra-EU dispatches ≥ €50,000 in any quarter.
    • Quarterly Intrastat if below that threshold.
    • If zero in a period, no need for that period.
  • Intrastat Inbound (Acquisti intra): Similarly, a list of purchases of goods (and some services) from other EU VAT-registered suppliers. Italy reintroduced requirement for services acquired from EU (since 2010).
    • Threshold for purchases: if over €50,000/quarter, monthly; else quarterly.
  • Deadline: Usually the 25th of the month following the period (but since digital, Italy extended to the month’s end for electronic submissions). Actually, as of 2022, the deadline is the month’s end following the reporting period.
  • These are filed through the Customs Agency’s EDI system (Intrastat is managed by Customs in Italy).
  • Starting 2022, Italy simplified Intrastat for services: detailed fields for each service aren’t needed, just total by country.
  Intrastat remains separate from OSS. OSS sellers do not report B2C EU sales in Intrastat, only B2B flows go in Intrastat.
• Annual Communication / Annual Return: Historically Italy had an “Annual VAT Communication” due at end of February summarizing prior year’s VAT data as a stop-gap before the annual return. This was abolished in 2017 once the annual return date was advanced to April. Now only the Annual Return by April 30 is required (discussed above). No separate communication required.
• SAF-T or Digital Reporting: Italy does not currently impose the OECD SAF-T (Standard Audit File for Tax) format on businesses. Instead, Italy moved directly to its real-time digital reporting (e-invoices, e-receipts). So while some EU countries demand SAF-T files in audits, Italy hasn’t adopted a standard SAF-T extraction requirement. However:
  • Italian tax authorities during an audit may request electronic accounting ledgers, invoice listings, etc., which are often provided in XML or CSV. Italy’s systems can generate data from their side due to e-invoicing.
  • Italy is active in EU discussions on e-Reporting (the upcoming ‘ViDA’ (VAT in Digital Age) proposals which might implement EU-wide digital reporting after 2028).
  • If Italy were to adopt SAF-T, it would likely be in line with an EU standard in the future. For now their own domestic digital approaches suffice for audit data.
• Other Listings:
  • Black List Transactions (Spesometro Black List): In the past Italy had to report transactions with tax havens (“Black list” countries) quarterly, but this was repealed around 2016.
  • Country-by-Country reporting: Only for multinational enterprise groups (part of OECD BEPS, not a VAT thing).
  • Tax Communications of invoices (Spesometro): This was replaced by e-invoicing in 2017. The old Spesometro (customer/supplier list) ended after 2016.
• Sectoral reports: If a company is in certain sectors (e.g. petroleum distributions), there might be extra excise or other reports, but strictly for VAT, the above covers it.
• Compliance Coherence: With e-invoices and e-receipts, many “extra” filings have been reduced:
  • Spesometro – eliminated.
  • Esterometro – eliminated in 2022.
  • Annual communication – eliminated.
  • They kept Intrastat due to EU obligations.
  • They kept quarterly LIPE (liquidation communication) at least for now. If the EU introduces EU-wide digital reporting, Intrastat might be integrated differently.
• Conclusion on other filings:
  • Italian businesses engaged in intra-EU trade must remember to do Intrastat in addition to returns.
  • If selling services cross-border, check if those need Intrastat (it’s required for certain B2B service categories).
  • No SAF-T submission required except if specifically requested in audit (but not standardized).
  • Also note: Italy has no separate EU Sales List distinct from Intrastat – Intrastat itself serves as the sales list (some countries separate ESL vs Intrastat, Italy uses one combined system for both fiscal and statistical info).
  • No separate annual sales listing because e-invoicing covers B2B and lottery receipts encourage B2C compliance.
• Periodic vs Occasional Filers: Non-established traders using OSS/IOSS do those returns in their scheme, and typically are not in Italian domestic filings. But if a non-resident is directly registered, they also must do Intrastat for their intra-EU shipments from Italy (their rep does it).

• Late/Non-Filing of Returns:
  • Late filing of annual VAT return: If the VAT return is not filed by the deadline (April 30), penalties range from 120% to 240% of the VAT due (minimum €250). If the return shows a credit or no operations (so no VAT due), a fixed penalty around €250 to €1000 can apply. However, if it’s filed within 90 days late, it’s considered “omessa dichiarazione sanata” (omission remedied) with smaller penalty (~€25 to €50). If never filed, beyond 90 days, it’s considered omitted return and the high 120-240% penalty kicks in (and potentially criminal consequences if VAT evaded > threshold). [marosavat.com], [marosavat.com]
  • Late filing of LIPE (quarterly VAT communication): Small penalties per communication (like €500, reduced if soon fixed).
  • False return (infedele dichiarazione): If a return is filed but understates VAT due, the penalty is 90% to 180% of the understated VAT. For example, if one underreported €10,000 of VAT, penalty base 90-180% = €9,000-€18,000. If the error doesn’t affect VAT (like misreport but VAT correct), a smaller fixed penalty might apply. [marosavat.com]
• Late Payment of VAT:
  • Late periodic payments: If monthly/quarterly VAT is paid late but before an audit, penalty is normally 30% of the amount not paid on time. However, if paid within 15 days late, penalty is reduced to 15% (half) under short-term rules. Actually, Italy’s administrative practice:
    • Payment within 14 days late: penalty 1.5% per day of delay (approx 0.1% per day, up to 2 weeks = ~2% max).
    • Payment 15-30 days late: 15% penalty.
    • 30-90 days late: 1.67% per month (~20% at 90 days).
    • After 90 days: full 30%. (These are after applying ravvedimento operoso voluntarily. If the authority catches before self-correct, it’s a flat 30%.)
  • Interest on late payment: On top of penalties, interest accrues on late payments at the statutory rate (which is set annually, ~4% per annum in recent years). This interest is prorated daily from due date to payment date. [ey.com], [ey.com]
  • If the taxpayer voluntarily corrects a late payment (via ravvedimento), interest and reduced penalties apply.
• Ravvedimento Operoso (Voluntary Correction): Italy strongly incentivizes taxpayers to correct mistakes proactively:
  • If you pay or file late on your own accord, penalties are reduced according to how soon you “ravvedi” (cure). For example:
    • Within 15 days: penalty 1/10 of full (so 3% instead of 30% for payment, if no payment, 0.5% per day up to 5% etc.),
    • 15-30 days: 1/9 of full,
    • 30-90 days: 1/8,
    • 90 days-1 year: 1/7,
    • within 2 years: 1/6,
    • beyond 2 years (before any audit notice): 1/5.
  • This sliding scale can drastically cut penalties. E.g., if you missed paying VAT €1000 due on Feb 16 and realize by April 10 (less than 90 days), you can pay the €1000 + interest ~€7 + penalty 1/8 of 30% = 3.75%. So only ~€37 penalty instead of €300.
• Issuing Improper Invoices:
  • If you fail to issue an invoice or receipt when required (for a taxable sale), the base penalty is 90% to 180% of the VAT on that transaction, with a minimum of €500 per infraction. Repeated failure to issue receipts can lead to business closure (temporary suspension) if more than 3 violations in 5 years.
  • If you issue an invoice with incorrect VAT (overstated) and thus claim too much credit, etc., similar infedele return penalties (90-180% of diff).
  • If you charge VAT but don’t pay it to treasury (just pocket it), it’s considered misappropriation – penalty 90-180% and potentially criminal if large.
• Fraud and Evasion:
  • Italy criminalizes serious VAT evasion: e.g. fraudulent returns (with fake invoices) or non-payment of VAT above certain thresholds (€250k) can lead to jail time (1 to 6 years depending on severity).
  • Use of false invoices: separate crime with heavy jail terms (up to 8 years for issuers of fake invoices).
  • However, minor negligence is kept in administrative realm.
• Late Intrastat:
  • Failing to file or late Intrastat yields an administrative fine from €500 to €1,000, often halved if it’s fixed promptly or spontaneously. Not as big as VAT underpayment, but can add up if multiple periods missed.
  • Late Esterometro (when it existed) was similar minor fine per filing (€2 per invoice up to €400 per quarter, etc).
• Split Payment and Reverse Charge Violations:
  • If an Italian supplier incorrectly fails to apply the split payment or reverse charge when required, they might be penalized for incorrect invoice (penalty up to 100% of VAT). However, since the tax might still reach the treasury via customer, often penalties are moderate in practice for e.g. mistaken treatment if no revenue loss.
• Interest (Interest on arrears):
  • The interest rate on late tax payments is set by Ministry of Finance yearly (currently around 4%, historically between 0.5% and 6% depending on year). It accrues daily and is not penal but compensatory.
• Joint Liability Penalties:
  • A fiscal representative is jointly liable for the foreign principal’s VAT debts and can face the same penalties if the principal defaults.
  • Company directors can be held personally liable for unpaid VAT if fraudulent intent can be proven, in extreme cases.
• Amnesty and Settlements:
  • Italy occasionally has voluntary disclosure programs or amnesties. For 2023, the Budget Law had some tax debt settlement schemes (like waiving minor interests for old debts).
  • There’s also an “adhesion” process where if a taxpayer agrees with an audit finding quickly, they can get penalties reduced by 1/3.
• Examples:
  • If a company underreported €50k of output VAT and is caught in audit: initial penalty due ~ €45k (90%). If they settle early, they might pay ~€30k. If they ignored and litigated, could be up to €90k.
  • If a small shop didn’t issue a receipt of a €100 sale with €22 VAT: penalty min €500 (way more than the tax itself), and if repeated thrice, tax police can shutter shop for a few days as deterrent.
  • If an annual VAT return was not filed and €10k VAT was due: penalty 120-240% of 10k = €12k-€24k plus that tax and interest; plus potential criminal if proving intent.
• Compliance emphasis: The heavy penalties push businesses to use ravvedimento to correct mistakes proactively. Italy collects substantial amounts via self-correction thanks to this structure.

• Split Payment (“Scissione dei pagamenti”): Italy applies a special mechanism for sales to government bodies and certain state-controlled entities. Under split payment (Article 17-ter DPR 633/72), when an Italian supplier issues an invoice to, say, a ministry or a municipality: [ey.com], [ey.com]
  • The supplier shows VAT on the invoice, but does not receive that VAT from the customer. The public entity withholds the VAT and pays it directly to the Treasury. [ey.com], [ey.com]
  • The supplier thus only collects the net amount. They must note “scissione dei pagamenti” on the invoice. They won’t include that VAT in their own payable (to avoid double payment).
  • This was introduced in 2015 to prevent government agencies paying VAT to vendors who then fail to remit it.
  • Initially it applied to PA (Public Administration) and later extended to large state-owned companies and listed companies on FTSE MIB (though for listed, it ended in July 2025 per new law). [ey.com], [ey.com]
  • EU granted Italy permission (derogation) to do this and extended it through June 2026 with the caveat to remove listed companies from scope by mid-2025 (which Italy did). [ey.com]
  • For suppliers, it means selling to the government can cause systematic VAT credits (since they still pay input VAT to their suppliers but never get output VAT from customers). They often then claim more refunds. This is acknowledged and expedited for them in refund process.
• Frequent Exporter Status (“Plafond”): Italian exporters can apply a VAT exemption on inputs up to a certain “plafond”:
  • If in the previous year a business’s exports or similar zero-rated sales ≥ 10% of total turnover, they qualify as a “esportatore abituale” – frequent exporter.
  • They can make purchases or imports without paying VAT up to a value equal to last year’s export turnover. This is done by providing suppliers or Customs a letter of intent (dichiarazione d’intento) stating they will use their “plafond”.
  • This allows them to avoid accumulating large VAT credits. The supplier does not charge VAT (marks invoice “non imponibile art.8 c.1 lett.c DPR633/72”).
  • If they exceed the plafond in purchasing, the extra purchases should be with normal VAT.
  • Misuse (declaring more than allowed) can lead to penalties.
  • The tax authority tracks these declarations (they must be filed electronically and the supplier must have confirmation protocol).
  • It’s a unique facility to ease exporters’ cash flow.
• Margin Schemes: Italy implements the EU margin scheme for certain second-hand goods, art, antiques, and collectibles. Under these schemes, VAT is applied only on the dealer’s margin, not full sale price:
  • E.g. used car dealers, if buying from private and reselling, can use margin scheme (VAT =22% of profit margin). The invoice in such case does not show VAT separately (no input deduction either).
  • Also a Travel Agents Margin Scheme (TAMS): Italy follows EU rules where tour operators charge VAT on their margin (special regime 74-ter DPR 633/72) and can’t separately deduct input or show VAT.
• Flat-rate regime (Regime Forfettario): Italy has a simplified tax regime for sole proprietors with turnover up to €85,000 (formerly 65k) where:
  • They are exempt from charging VAT (and from almost all VAT obligations). [sme-vat-ru….europa.eu], [sme-vat-ru….europa.eu]
  • They also pay a flat 15% income tax in lieu of normal progressive tax.
  • In VAT terms, these businesses do not add VAT to their sales and cannot deduct VAT on purchases. They simply ignore VAT (effectively they operate like final consumers in VAT chain).
  • This regime is popular (~1.5 million taxpayers). It reduces compliance burdens (no returns, invoices mention “operazione senza applicazione IVA – regime forfettario”).
  • It’s a notable feature because it essentially removes a chunk of small business from the VAT system’s output side, though their suppliers still charge them VAT.
  • This was already touched on in registration and threshold context.
• Public Transportation special regime: Local passenger transport (buses, etc.) are taxed at 10% but often companies opt for a special regime where input VAT on vehicles and fuel is not deductible but a certain percentage of turnover is treated as VAT-included and backed out. This is a niche arrangement by DPR 633.
• Agricultural flat-rate (Regime agricolo): Farmers can opt to apply a flat compensation percentage instead of normal VAT. They charge VAT to customers at standard or reduced rates, but they do not do input/output calc; instead they keep a portion as “compensation” and forward remainder. Or smaller farmers can be exempt if under certain size.
  • Typically, agricultural products have compensation rates (like 4%, 5.4%, etc. depending on product) which approximate input VAT. The farmer charges normal VAT to purchaser but the purchaser can deduct only the difference between actual VAT and comp rate; effectively, farmer keeps comp amount.
  • This is an EU allowed simplification for small agri.
• VAT Groups and Internal transactions: We covered VAT grouping – not exactly a common feature in all countries (some have none). Italy’s introduction of VAT grouping from 2019 and conversion of prior “VAT consolidation” is notable.
• Bad Debt Relief complexity: Already discussed that Italy imposes conditions (one year or insolvency). It’s notable that historically Italy was stingy on bad debt adjustments requiring insolvency proceedings – more restrictive than some countries.
• E-Invoicing leadership: Italy’s mandatory e-invoicing and e-reporting is itself a notable “feature” as it’s far ahead of most EU countries. It dramatically changed compliance and has cut missing trader fraud and improved collections. So much that other countries plan to follow the Italy model by 2024-2028 (France, Poland, etc.).