Italy: New VAT measures, effective 2018 | KPMG | GLOBAL

Italy: New VAT measures, effective 2018

Italy: New VAT measures, effective 2018

Law Decree no. 148/2017, published in the official gazette on 16 October 2017, includes value added tax (VAT) measures, including provisions for the extension of the split-payment regime and relating to changes to the rate of VAT.

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Split-payment extension

Effective 1 January 2018, the split-payment regime will be extended to supplies of goods and services rendered to additional categories of public bodies (such as public economic bodies, special companies, foundations, etc.) and their “subsidiaries.” The decree further clarifies that non-Italian corporations listed on the Italian stock exchange (Borsa Italia) are subject to the split-payment regime only if registered for Italian VAT purposes.

An implementing decree is expected by the end of November 2017.

VAT rate changes

The decree revises a scheduled increase to the 10% “reduced rate” of VAT (as scheduled under the Financial Bill for FY 2017). The new schedule for the phase-in of the increase to the “reduced rate” of VAT is as follows:

  • Increase from 10% to 11.14% effective 1 January 2018
  • Increase from 11.14% to 12% effective 1 January 2019
  • Increase from 12% to 13% effective 1 January 2020

The decree does not affect scheduled phase-in changes (also under the Financial Bill for FY 2017) to the “standard rate” of VAT. Therefore, the “standard rate” of VAT will be:

  • Increased from 22% to 25% effective 1 January 2018
  • Increased from 25% to 25.4% effective 1 January 2019
  • Reduced from 25.4% to 24.9% effective 1 January 2020
  • Increased from 24.9% to 25% effective 1 January 2021

These VAT rate changes will not be triggered if certain budgetary targets are met. According to a government release (16 October 2017), it is anticipated that the increases to the standard and reduced rates of VAT would be “neutralized” by the Financial Bill for FY 2018, expected to be approved by the end of FY 2017.

 

Read an October 2017 report [PDF 166 KB] prepared by the KPMG member firm in Italy

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