Italy: VAT measures enacted in 2016 budget law

Italy: VAT measures enacted in 2016 budget law

The budget law for 2016 (Law n. 208 of 28 December 2015)—passed by the Italian Parliament on 22 December 2015 and published in the Italian official gazette on 30 December 2015—introduces new measures concerning the value added tax (VAT) in Italy.

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The VAT provisions in the newly enacted budget law:

  • Extend the reverse-charge mechanism to services rendered to a consortium by its members when the consortium is the supplier of a public body
  • Extend the statute of limitations on assessments, from five years to six years
  • Allow recover of output VAT charged on supplies to customers that declare bankruptcy (or similar proceedings) from the date of the bankruptcy proceedings, not from the end of the proceedings
  • Reduce the rate of VAT for “e-periodicals” (newspapers, daily news, books, magazines) to 4%
  • Allow for a phased-in increase in the rate of “standard VAT” from 22% to 24% effective in 2017 and ultimately to 25% effective in 2018 (if certain budgetary targets are not met)
  • Allow for an increase in the rate of the “reduced VAT” from 0% to 13% effective in 2017 (but no change to the “super-reduced VAT” rate of 4%)• Introduce a new rate of VAT on medical and social services (at a rate of 5% instead of 4%)
  • Provide a new flat rate for certain agricultural products (to be set by an implementing decree)
  • An increased threshold for providing services to non-profit organizations, not requiring prior notice to the Italian tax authorities 

Read a January 2016 report [PDF 264 KB] prepared by the KPMG member firm in Italy: Budget Law 2016 - New Italian VAT measures

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