Italy: New VAT measures introduced | KPMG | GLOBAL

Italy: New VAT measures introduced

Italy: New VAT measures introduced

Law Decree no. 50, as passed by the Italian Parliament and enacted 24 April 2017, includes the following value added tax (VAT) measures:

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Reduced term for input of VAT recovery: The law decree shortens by two years the period for exercising the right to recover input VAT. Input VAT will have to be recovered by the due date of the annual VAT return in the same year VAT is triggered. The law decree does not clarify whether the new rules on input VAT recovery apply retroactively.

Split payment extension: Beginning 1 July 2017, the split payment regime will be extended to supplies of goods and services rendered to additional categories of Italian public bodies, to their subsidiaries, and also to the corporations listed at the FTSE MIB Italian stock exchange (Borsa Italiana). The split payment—first introduced in Italy on 1 January 2015—must continue until 31 December 2017. However, the Italian government has asked the European Commission to postpone its application until 31 December 2020.

Future VAT rates increase: The law decree provides for a gradual increase in VAT rates, as follows, if budgetary targets are not met: 

The “reduced” VAT rate (currently 10%) would increase: 

  • From 10% to 11.5% from 1 January 2018
  • From 11.5% to 12% from 1 January 2019
  • From 12% to 13% from 1 January 2020

The standard VAT rate would increase: 

  • From 22% to 25% from 1 January 2018
  • From 25% to 25.4% from 1 January 2019
  • From 25.4% to 24.9% from 1 January 2020
  • From 24.9% to 25% from 1 January 2021

Off-set of input VAT against other tax payables: The law decree reduces the threshold from €15,000 to €5,000 for off-setting VAT receivables against other tax payables without having to validate the VAT return and file the payment form electronically with the Italian tax authorities.

 

Read an April 2017 report [PDF 169 KB] prepared by the KPMG member firm in Italy

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