A VAT Refund Italy Guide

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NON-EU

based businesses

VAT-registered businesses outside of the European Union are eligible to recover VAT on business costs from A VAT Refund Italy Guide under the 13th Directive.

Italy’s VAT Rates:

Italy’s value-added tax system (VAT) known as the imposta sul valore agguiunto (IVA) first emerged in 1973 at a standard rate of 12%. Over the years, this EU country’s VAT rate has risen steadily, with the most recent hike—up to the current standard level of 22%—occurring in 2013.

Unlike other members of the European Union, Italy has been somewhat hesitant to lower its VAT rates in times of economic hardship. However, slight dips occurred in 2010 and 2012, and some relief was given during the COVID-19 pandemic. Nevertheless, Italy has one of the highest standard VAT rate in the EU today.

Current Rates in Italy

Italy’s VAT rates are as follows:

• Standard VAT Rate (22%) – The majority of goods and services fall under the standard rate.

• Reduced VAT Rate (10%) – This category encompasses household gas, water, and electricity consumption, building renovations, medicine, restaurants and hotels, and admission to cultural events.

• Further Reduced VAT Rate (5%) – Various foodstuffs and social services are taxed at 5%.

• Super Reduced VAT Rate (4%) – Some foods, beverages, and agricultural products fall under this category. The 4% reduced VAT rate also applies to books, newspapers, periodicals, TV licenses, and medical equipment for people with disabilities.

Additionally, a zero-rate VAT category exists for some internal and international transport.

How to Pay VAT Bill in Italy

All VAT payments in Italy must be submitted online using tax form F24. If you have an Italian VAT number, you have two possible payment schedules to follow:

• Monthly payments – The majority of taxpayers calculate and submit their VAT monthly. Submissions are due on the 16th of every month.
• Quarterly payments – If your earnings are below a specified threshold (EUR 400,000 for self-employed individuals or service businesses; EUR 700,000 for other businesses), you can submit your payments quarterly instead. Bear in mind that if you opt for the quarterly scheme, you will pay 1% interest. Submissions are due on the 16th of the second month following the quarter for the first three quarters and on March 16 of the following year for the final quarter.

If, instead of owing VAT, you are entitled to a VAT refund, Italy makes it relatively easy for you to claim your repayment. If you’re established in another EU country, you can submit your VAT refund request to your government’s tax authority. If you’re a non-EU resident, you’ll send in a physical copy of form VAT 79.

Italy VAT Compliance

Complying with VAT in Italy, and claiming your VAT refund, requires proper record keeping. Businesses must maintain records of invoices issued, purchases, and self-billing invoices from non-resident entities. Each invoice must include the following details:

• A sequential invoice number
• A registered VAT number
• The taxable amount
• The amount of VAT
• The date of issue
• The customer data

Additionally, to remain compliant, you must issue e-invoices with every offer of goods or services, use approved foreign exchange rates, and submit all documents on time.

Should you have any questions or concerns about VAT rates, refunds, or compliance, feel free to contact VAT IT at any time.

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Sources: 

Organisation for Economic Cooperation and Development. Consumption Tax Trends – Italy. https://www.oecd.org/tax/consumption/consumption-tax-trends-italy.pdf

Agenzia Entrate. General VAT rules and rates. https://www.agenziaentrate.gov.it/portale/web/english/general-vat-rules-and-rates 

Agenzia Entrate. Paying VAT. https://www.agenziaentrate.gov.it/portale/web/english/paying-vat

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