All EU member states have a fixed format for their VAT numbers. In Italy, it includes 11 digits and the prefix IT (e.g., IT12345678901).
The standard VAT rate in Italy is 22%, with reduced rates of 10% and 4% on certain goods and services. Some services are exempt from Italian VAT, such as insurance and special financial services.
Businesses with an Italian VAT number must submit periodic payments. VAT filings and payments are submitted either monthly, quarterly, or annually, and VAT returns are submitted annually or quarterly.
In the case of the late filing of VAT returns and payments, the Italian government prescribed the penalties as follows:
According to Art. 21 of the Italian VAT Act, invoices must contain at least the following information:
Italy has introduced mandatory real-time electronic sales invoice issuance and reporting from 1st January 2019. E-invoices must be issued in a prescribed format XML, digitally signed to guarantee the authenticity of origin and the integrity of the content, and be sent to the Exchange System (SDI – Sistema di Interscambio) by the taxpayer directly or through designated intermediaries.
Detailed invoice information on foreign sales and purchases will still have to be submitted to the tax authorities through a new ‘cross-border communication.’ This is due by the end of the month following the reporting period
Once SDI receives an invoice, and before it is sent to the recipient, an initial formal check is made to monitor the validity of the invoice format and content, as well as its compatibility with data already in the hands of tax administration.
All invoices shall be issued within 12 days after the registered (completed) sale.
Real-time reporting to Italian Financial Authorities (Sistema di Interscambio – SDI) is mandatory for all taxable persons in Italy.
How does it work?
Who is affected by this obligation?
Electronic invoices must be submitted for all goods or services sold by taxable persons established in Italy.
As the first country in Europe, Italy introduced a Digital Service Tax (DST) from 1st January 2020.
Given the adoption of Digital Service Tax, all taxable persons/businesses that, individually or group-wide have (a) a total worldwide revenue higher than EUR 750 million and (b) revenues obtained from the digital services in Italy higher than EUR 5,5 million during the calendar year must pay Digital Service Tax. Digital Service Tax shall be calculated by applying the 3% rate to the taxable revenues obtained by the taxable person during the calendar year.
Same as for other taxes in Italy, taxable persons are required to pay the Digital Service Tax by 16 February of the calendar year subsequent to the one of reference and to file by 31 March of the same year.
The Italian digital tax hits transactions such as advertising, as well as services such as cloud computing, sparing digital content streaming services such as tech giants Amazon, Netflix, and Spotify.
The European Union had attempted to agree on a uniform digital tax across the Union. Still, that idea was shortly abandoned because of opposition from countries such as Ireland that are home to the regional headquarters of several large US tech companies. Regardless, it is expected from other EU countries to adopt similar digital tax regulations in the upcoming years to prevent their budget deficit growing caused by the VAT gap, but also to bring new money to their budget. This is supported by the fact that Italy forecasts that the digital tax will bring EUR 700 million.
As described in the draft of DST regulations, this sort of tax will be payable by all taxable persons/businesses that, individually or group-wide have (a) a total worldwide revenue higher than EUR 750 million and (b) revenues obtained from the digital services in Italy higher than EUR 25 million during the calendar year must pay Digital Service Tax.
Unlike Italy who introduced Digital Service Tax, Italy is more cautious due to strong opposition from the home-countries of the world’s tech giants, such as the United States of America, who already announced countermeasures for Italy in case of adoption of Digital Service Tax. The last news from the financial industry says that the adoption of this sort of tax in Italy is postponed until all parties find a common interest in its adoption.
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