The rates of VAT applied in Italy during 2018 are being maintained throughout 2019. The past couple of years has seen successive Italian budgets postpone scheduled yearly VAT rate increases. However, current Italian legislation provides that if certain budgetary targets are not met, the following VAT increases will apply:
- As of 1st January 2020:
- The standard VAT rate will rise to 25.2%
- The 10% reduced VAT rate will rise to 13%
- As of 1st January 2021, the standard VAT rate will rise again to 26.5%
Recently, the Italian government has been warned repeatedly by the EU over its spiraling budget deficit, which stands at 2.5% of GDP and is expected to climb to 3.5% in 2020. Consequently, it is facing mounting pressure to go ahead with the planned VAT rate increases this time, in order to close the deficit. Since this would not be a popular political move internally, however, the government would only take these steps very reluctantly and as a last resort.
Contact our VAT experts now and find out how this change could affect your business.