Budget changes to VAT rates

The Italian 2019 Budget Law has provided for the following main changes to Italian VAT rules:

  • Maintenance of the 2018 VAT rates
    The increases to the standard and reduced VAT rates, anticipated under the 2018 Budget Law, have been postponed.  Therefore, the standard VAT rate remains at 22% and the reduced VAT rate remains at 10%, for at least another year.
  • The scope of the reduced 10% rate of VAT applicable to certain human and veterinarian medicines is extended to medicines classified under heading 3004 of the Combined Nomenclature System.
  • The scope of the super-reduced 4% rate of VAT applicable to certain types of bread and bakery products is extended to also include crackers and rusks. This will likely encompass products containing dextrose, sucrose, fats and industrial food oils allowed by law, cereals, grains, seeds, oil seeds, aromatic herbs and common spices.
  • Future VAT rates
    If certain budgetary targets are not met, the following increases to the Italian rates of VAT are expected to apply:

    • Standard VAT rate:
      – 2% as of 1st January 2020
      – 5% as of 1st January 2021
    • Reduced VAT rate:
      – 13% as of 1st January 2020

“Spesometro” filing obligation abolished

From 1st January 2019, the requirement to file VAT Invoice Data Reports, which had replaced the Spesometro, is abolished. The final submission relating to transactions carried out in the second half of 2018 which are captured by these returns, is due on 28th February 2019.

The abolition of this declaration applies to both resident and non-resident VAT registered businesses. Whilst the Esterometro (see below) is now required for residents, the removal of the Spesometro has left a gap in reporting in relation to non-residents businesses. It’s possible the tax authority will introduce something to replace it.

Launch of the “Esterometro”

With effect from 1st January 2019, Italian VAT established businesses must file the Esterometro return.  This is a monthly “cross-border communicationdemanded by the Italian tax authorities. The return will have to detail invoice information related to the sales of goods and services provided to or received from parties not established in Italy. The purpose of this return is to capture transactional data not captured by Italy’s mandatory e-invoicing system, which only applies to Italian established businesses.

The Esterometro must be submitted electronically by the last day of the month following the tax period.  This means that the first filing date for many established businesses will be on 28th February 2019.

If you should like to discuss the above developments further, please do get in touch with us.


By |February 13th, 2019|