Italy was one of the founding members of the European Union in 1952 and is also a part of the Eurozone, adopting the Euro as currency in 1999. Since 1990 the country has been a member of the Schengen Area.

VAT rates in Italy

The standard rate of VAT is 19.6%, and reduced rates of 2.1%, 5.5% and 7% are available.

Standard Rate of VAT     21%

Reduced Rates  4% / 10%

VAT registration in Italy

There is no VAT registration limit in Italy for either established or non-established businesses.

Distance sales have a limit of €35,000 for VAT registration.

The format for a VAT identification number is: IT 123456789 10 11. Every company must hold a number like this in order for accurate taxation.

VAT returns must be submitted annually and VAT payments monthly or quarterly.

Are there any Intrastat thresholds in Italy?

No. There is no threshold for either dispatches or arrivals.

VAT recovery in Italy

  • Is VAT recovery permitted for non-established non-EU businesses?

Yes, Italy allows VAT recovery but only with countries with which there is a reciprocity agreement.

  • Are there any non-VAT recoverable expenses?

Yes, recovery of input tax is restricted on certain items, i.e. business entertainment and cars.

Reverse charge applies to the majority of cross border services. An extended charge applies to the supply of goods and services by a non-established to an Italian VAT registered customer.

Requirements and regulations in Italy

Any company established in a non-EU member country must appoint a tax representative to register for VAT in Italy.

Use and enjoyment rules are in place in Italian legislation

The period of VAT recovery by tax authorities has a timescale of 4 years in order to prevent fraud.

Similarly, there is a period of 2 years for VAT deductions and refunds.

Please contact us for further information about paying taxes in Italy, and a member of our team will be happy to help you.

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