Key takeaways
- Reduced VAT rates introduced: Feminine hygiene products, baby items, and gas supplies now benefit from a reduced 5% VAT rate, while pellets are taxed at 10%.
- Temporary gas VAT reduction extended: The 5% VAT rate on gas and energy use remains in place until September 30, 2023.
- Stronger VAT compliance rules: Italy has tightened VAT registration checks and introduced stricter measures to prevent tax evasion, including new rules for online marketplaces.
Italy has implemented significant changes and updates to its Value Added Tax (VAT) system in 2023. These changes aim to streamline tax processes, promote economic growth, and crack down on tax fraud and evasion. Here are some key highlights of the changes to VAT in Italy in 2023.
New Italy VAT rate reductions
The Italy VAT rate on feminine hygiene products, baby products (including diapers, car seats, and certain foodstuffs such as powdered and liquid milk), and face masks have been reduced and are now subject to the 5% VAT rate.
Italy has also extended its temporary cut to the VAT rate on domestic and industrial use gas. Gas, district heating, and energy produced from methane gas, as well as gas system charges, will continue to be subject to the reduced rate of 5% until September 30, 2023.
The Italian VAT rate on pellet sales has been reduced to 10%, down from the standard rate of 22%.
Laws strengthening VAT compliance introduced
The Italian government has implemented new measures to combat tax evasion and increase VAT compliance. Stricter penalties and enhanced monitoring systems have been introduced to ensure businesses accurately report and pay their Italy VAT obligations. Specifically, enhanced checks are now in place for those seeking to register for a new Italian VAT number.
In an effort to tackle VAT fraud in the online marketplace, the government has also introduced measures to hold online platforms accountable for VAT payments on transactions made through their platforms. These measures are intended to ensure that all VAT obligations are met, irrespective of the seller's location.
Frequently asked questions
What are the new reduced VAT rates in Italy?
Italy has lowered the VAT rate to 5% for feminine hygiene products, baby goods (such as diapers and car seats), and gas supplies. Additionally, pellet sales are now taxed at 10%, down from 22%.
How is Italy improving VAT compliance in 2023?
The Italian government has introduced stricter VAT registration checks and tougher anti-fraud measures, particularly targeting online marketplaces to ensure that all sellers properly collect and remit VAT.
