The Italian tax authorities have announced that the new Stability Law for 2015 provides for VAT increases over the next 4 years.

It should be noted however that these increases will only take place if certain budgetary targets are not reached by pre-set milestones.

Proposed changes to Italian VAT rates

  • The reduced rate of VAT, currently 10%, will
    1. Increase to 12% on 1 January 2016; and
    2. Increase to 13% on 1 January 2017
  • The standard rate of VAT, currently 22%, will
    1. Increase to 24% on 1 January 2016; and
    2. Increase to 25% on 1 January 2017; and
    3. Increase to 25.5% on 1 January 2018
  • The “super” reduced rate of 4% will not change


Just before the New Year, it was announced that Italy would apply a reduced VAT rate of 4% to supplies of e-books.  Further information has now been released on this rule change, confirming that the reduced rate will only apply to products which have an ISBN code.

This means that most traditional books will be eligible for the reduced rate but electronic versions of magazines will not.  Those publishers who have both types of product will need to take care in order to ensure the correct VAT rates are applied.

Supplies to public bodies

From 1 January 2015, public bodies who are charged VAT by their supplies will need to make split payments when settling their invoices.  The VAT exclusive amount of the bill will continue to be paid to the supplier but VAT on the supply will instead be payable into a “blocked VAT” bank account managed by the Italian Treasury.

This new method of VAT collection has been introduced to help combat VAT fraud, particularly that of missing traders who collect VAT but then disappear before paying the money to the tax authority.  Approval to implement this new procedure from the European Commission is expected shortly.

By |January 15th, 2015|