Key takeaways
- Italy VAT rates: The standard VAT rate is 22%, with reduced rates of 10%, 5%, and a super-reduced 4% rate, plus a 0% rate for certain transport and medical services.
- Registration threshold: Resident businesses must register once turnover exceeds €85,000, while non-EU companies must appoint a fiscal representative.
- Filing & penalties: VAT returns are filed quarterly and annually, and late filings or payments can result in fines up to 240% of the VAT due plus interest.
Are you considering a business expansion into Italy? Then now is the perfect time to learn a little bit more about how the Italian VAT system works with our guide. Read on to find out about VAT laws and obligations when trading in Italy.
What is the Italian VAT rate?
Italian VAT (Value Added Tax) is known as Imposta sul Valore Aggiunto (IVA). The standard Italy VAT rate is 22%, but there are also two reduced rates of 10% and 5%, and a super reduced rate of 4%.
Registering for VAT in Italy
The VAT registration threshold for resident businesses in Italy is €85,000. That means any business exceeding this threshold must register for VAT.
From July 1, 2021, all EU member countries began operating under the same distance selling threshold of €10,000. So, if your company’s annual turnover for cross-border trade with an EU country exceeds €10,000, you will need to register for VAT in Italy. You will also have to register if you store products in Italy or participate in an FBA (Fulfilled-by-Amazon) program that includes Italy.
In order to receive an Italian VAT number in Italy, you must fill out and submit a "Declaration of Commencement, Change of Data, or Cessation of Activity" to the Italian Revenue Agency (Agenzia delle Entra). The Declaration must include identification information as well as the sort of activity to be pursued and the location of the business.
Fiscal representation in Italy
It should be noted that non-EU companies selling in Italy will be required to appoint a fiscal representative, who will be jointly liable for the Italian VAT.
Italian VAT return filing and penalties
In Italy, VAT returns must be filed online on a quarterly basis using the Italian Target System via the Comunicazione Liquidazioni Periodiche IVA. Annual returns are compulsory for all companies registered for Italian VAT.
Quarterly VAT returns are due on the last day of each month following the previous tax period, while for annual returns you need to file by April 30th. The VAT due must be paid every month, although businesses with a turnover of €700,000 or less can opt to pay quarterly if they agree to pay a 1% non-refundable surcharge.
The penalty for late filing in Italy is €25 if submitted within 90 days of the deadline and €248 plus up to 240% of the VAT due if after the 90 days. For late payment of Italian VAT, the fine is 30% of the VAT due with 2.5% of interest added every year.
Italian Intrastat declarations
In Italy, both resident and non-resident businesses are required to submit Intrastat returns. The annual threshold for filing an Intrastat return for arrivals is €200,000 with submissions to be made monthly. For dispatches below €50,000, submissions are quarterly, whereas if the threshold exceeds €50,000, submissions must be made monthly.
Reverse charge in Italy
Designed to reduce the need for companies trading across Europe to VAT register, the reverse charge mechanism shifts the responsibility for reporting and paying VAT from the supplier to the recipient of goods or services. In Italy, the reverse charge applies to transactions involving EU cross-border supplies as well as specific industries.
Frequently asked questions
What is the VAT rate in Italy?
Italy’s standard VAT rate is 22%, with reduced rates of 10% (for hotels, restaurants, and pharmaceuticals), 5% (for children’s goods and certain foodstuffs), and a super-reduced rate of 4% (for books, medical devices, and agricultural products). A 0% rate applies to transport and healthcare services.
When do I need to register for VAT in Italy?
Resident businesses must register once annual turnover exceeds €85,000. Non-resident companies must register immediately upon carrying out taxable activities. The EU-wide distance selling threshold is €10,000.
How do I register for VAT in Italy?
Businesses register by submitting a Declaration of Commencement to the Italian Revenue Agency (Agenzia delle Entrate), detailing business activity and location. Once approved, you’ll receive your Italian VAT number.
Do foreign businesses need a fiscal representative in Italy?
Yes. Non-EU companies are required to appoint a fiscal representative, who shares joint responsibility for VAT compliance and payment.
How often must VAT returns be filed in Italy?
- Quarterly – standard filing frequency
- Annual return – required for all VAT-registered businesses (due April 30)
Quarterly returns are due on the last day of the month following the tax period. Monthly VAT payments are mandatory, but smaller businesses may pay quarterly with a 1% surcharge.
Are Intrastat declarations required in Italy?
Yes. Intrastat returns are due for EU trade:
- Arrivals: monthly if over €200,000
- Dispatches: quarterly if below €50,000, monthly if above
Submissions are electronic via the Italian Customs Agency.
