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Italy: “Web tax” update; no changes to VAT rates

Italy: “Web tax” update; no changes to VAT rates

The Budget Law 2019 includes a “web tax” and certain value added tax (VAT) items.

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“Web tax”

The version of the “web tax” included in the Budget Law 2019 differs from the version of the tax legislation as proposed and the version that was passed by the Italian Senate on 22 December 2018. Read TaxNewsFlash

Specifically, the new “web tax” will apply at a rate of 3% on revenue generated from certain digital services when provided under business-to-business or business-to-consumer transactions. This final version of the “web tax” effectively repeals measures that were introduced (but never made effective) by the Budget Law 2018. 

It is expected that the government will issue an implementing decree for the “web tax” by 30 April 2019, and that these rules would be effective 60 days after publication (perhaps effective from 30 June 2019).

VAT rates

Gradual increases to the value added tax (VAT) rates have been postponed to 1 January 2020.  At that time, the “reduced VAT rate” of 10% would increase to 13%, and the “standard VAT rate” of 22% would increase to 25.2% (effective 1 January 2020) and then increase again to 26.5% (effective 1 January 2021). These VAT rate increases will not apply if certain budgetary targets are met.

Other VAT changes in the Budget Law 2019 reflect:

  • The “reduced VAT rate” of 10% for certain human and animal pharmaceuticals has been expanded to include other medicines under customs code 3004.
  • The “super-reduced VAT rate” of 4% that applies to certain bread products has been expanded to include other bread products.

 

Read a January 2019 report [PDF 184 KB] prepared by the KPMG member firm in Italy

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