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Italy VAT News: Increased VAT Thresholds for Reporting Purposes

Italian Ministry of Finance announced that the country increased the VAT thresholds that determine how often VAT has to be paid. In Italy, the tax is known as the IVA — Imposta sul valore aggiunto.

The affected thresholds were:

  • the supplies of services turnover threshold of EUR 400 000 — lifted to EUR 500 000;
  • the supplies of goods turnover threshold of EUR 700 000 — raised to EUR 800 000.

By the way, do you know how VAT is calculated? Check our guide, where we explain how to work out VAT in different scenarios and calculate VAT inclusive and exclusive prices:

The standard VAT returns period in Italy is quarterly. However, the VAT payment frequency is different: VAT can be paid monthly or quarterly, with monthly frequency chosen more often, as the quarterly payments include a 1% interest fee on top of the collected VAT.

The quarterly VAT payment period can be chosen whenever a company‘s turnover is below the previously stated threshold. Therefore, from now on, companies selling services with a turnover below EUR 500 000 and businesses selling goods with a turnover not exceeding EUR 800 000 can choose to opt for the quarterly payment schedule. However, the companies had to notify the tax authorities about this wish when submitting the annual VAT return for 2022. Therefore, the next date for notifying authorities about a want to change the payment frequency will be when submitting the annual VAT return for 2023.

After confirming the new VAT payment frequency, the company can pay VAT quarterly until it starts exceeding the turnover threshold or pulls out of the schedule by notifying the tax authorities in the annual VAT return.

Some exceptions apply. For example, fuel distributors, road work companies, public service providers, artists and health professionals are automatically included in the quarterly payment plan without the need to pay the 1% interest fee on the VAT collected.

If you are operating a company in Italy and want experts by your side — get in touch with our team, and we will help you navigate Italian VAT.