Italy – Consolidated VAT Code: New Requirements For Taxable Persons

Italy will finally have a Consolidated VAT Code in place, after more than a few years of ongoing debates and steps forward and backward. On January 1, 2027, a new consolidated VAT Code will take effect. In the Official Gazette, the adopted, final version of the Consolidated VAT Code was published and is ready for review by all interested parties affected by the Italian indirect tax framework. 

Timeline 

The Consolidated VAT Code will take full effect on January 1, 2027. 

Scope of the VAT Code 

The Government’s strong push to finalize the agenda for adopting the uniform VAT code aims to simplify the understanding of indirect tax rules for all stakeholders. The Italian VAT regulatory system is overly fragmented, with rules and provisions spread across multiple decrees, regulations, and guidelines, which can be confusing for many. 

Alongside the set goal, to codify set rules and regulations, and to have one pivotal source of VAT truth, other driving forces for the adoption of the VAT code can be seen in the necessity to align part of its VAT rules with the European VAT Directive, and in the future to be pillars of the VAT in the Digital Age. 

In addition to unifying existing and effective tax provisions, the new VAT Code will introduce new tax rules that current and future taxpayers should be aware of. New tax provisions will enable Revenue Authorities to implement stronger monitoring controls, reduce documentation, enable easier oversight of the e-invoicing framework and digital tax reporting within the retail and e-commerce B2C sector, and introduce a new customs framework for exports. 

Key takeaways of the new provisions: 

1. New customs framework for export proceedings. Practically speaking, less paperwork, more clarity for the clearance procedure, less possibility for counterfeiting of documentation, and easier classification for tax-exempt transactions. 
2. The framework for electronic invoicing and digital tax reporting shall be unified under the VAT Code. Rules for the issuance, transmission, receipt, and storage of e-invoices; digital tax reporting for B2C transactions; and daily reports for retail will be searchable under a single code. 
3. Full sync of digital tax reporting for daily reports(Z reports) and pre-filled VAT returns for retail. 
4. Updated VAT rates for specified types of supply. 
5. Easier look to find an approach for regulatory references or VAT tables