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The Italian government announced that the standard VAT rate will increase from 22% to 25% in 1 January 2018. An additional increase of 0.9% will be made on 1 January 2019, hence bringing the standard VAT rate in Italy to 25.9% in 2018, the second highest in the European Union only after the Hungarian 27% stadard rate. In addition, the reduced VAT rate is also expected to increase from 10% to 13% as from 1 January 2018.
Last year the Italian government cancelled the planned increase of VAT rates from 22% to 24% as from 1 January 2017. We suggest waiting until the recently announced VAT rate changes are confirmed later in the year to avoid having to reverse your system updates.
These rate changes were announced as part of the so called ´stability law´ published by the Italian government. The expected revenue collected from VAT will increase to €20 billion in 2018 and €23.2 billion in 2019.
VAT rate changes require ERP systems to be adapted and all invoices to be issued with the correct rate as from the implementation date. Businesses should look at reporting rules on credit notes cancelling old VAT rate invoices, tax point rules to determine which rate applies and invoicing rules in Italy. Please send us an email if you need help with any of these requirements.