VAT in Italy

Italy is a member of the European Union (EU) and draws up its tax rules according to the laws or directives issued from Brussels by the EU. The current VAT directive applies to all 27 member states of the European Union, and it governs the rules on VAT compliance, and in some part, covers the setting of VAT rates.

As an EU member state, Italy is obliged to implement the VAT directives, which provides guidance on VAT. Where there is a conflict, the European Union’s directive takes precedence. Italy is a member of the European single market economy and uses the Euro (€) for its currency. In Italy VAT is known as: Imposta sul Valore Aggiunto, or IVA.

VAT registration in Italy

Both EU and non-EU businesses may trade in Italy without establishing a local presence. This is known as non-resident VAT trading. There is no VAT threshold in Italy for the registration of non-resident traders, but you will need one to record transactions and your Italian customers will want proof that you have obtained one.

There are strict rules on the situations where VAT registration is permitted. Common scenarios that require Italian VAT registration include:

• Importing goods into Italy;
• Organising live events, conferences, etc. in Italy;
• Holding goods in a warehouse in Italy as stock for resale;
• Buying goods within Italy that are subsequently re-sold in-country;
• Selling goods from Italy to other EU member states;
• Distance-selling to private individuals in Italy, e.g. internet retailing or trading through an e-commerce platform.

Registering for Italy VAT generally takes less than a week once all documentation has been submitted to the tax authority, but this varies from seller to seller and will depend on the specifics of an individual company.

Italian VAT compliance

There are detailed rules controlling the recording and processing of Italian transactions for VAT purposes. This includes guidelines on:

• Italian invoice requirements;
• When to issue an Italian tax invoice;
• Foreign currency reporting;
• Credit notes and corrections;
• Correcting entries from prior returns;
• Which accounting records must be maintained.

Italian VAT rates