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Italy: VAT provisions, digital services tax effective 1 January 2020

Italy: VAT provisions, digital services tax

Law no. 160 of 27 December 2019—also referred to as the “budget law”—is effective 1 January 2020, and includes value added tax (VAT) measures, a digital services tax, and a tax on single-use plastic items.


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The digital services tax was included in the budget law, and has an effective date of 1 January 2020.

The “plastic tax” will be imposed on single-use products (e.g., a plastic grocery bag), with an effective date expected to be 1 July 2020 (the effective date is the first day of the second month after the implementing rules are introduced, and these rules are expected by May 2020).

The VAT-related measures in the budget law include the following:

  • No increase to the VAT rates (the previously scheduled rate increases have been postponed until 2021 or 2022)
  • The place of supply for short-term hiring or leasing of pleasure boats and yachts will be outside the EU when there is adequate proof of such external-EU use provided
  • New rules for “habitual exporters” (esportatori abituali) concerning “letters of intent”

Italy has not implemented the EU VAT “quick fixes” and it is uncertain when new requirements for intra-Community supplies will be implemented.

Other VAT measures

Law no. 157 of 19 December 2019 reflects measures originally included in Law Decree no. 124 of 26 October 2019, but with certain changes concerning:

  • VAT on supplies of fuel when stored in a tax warehouse
  • The frequency for reporting cross-border transactions (generally, each quarter by the end of the following month)
  • Delayed effective date of 1 July 2020, of the tax receipt lottery affecting retailers
  • No VAT exemption for driving school tuition
  • Reduced VAT rate for supplies of feminine hygiene products

Read a January 2020 report [PDF 198 KB] prepared by the KPMG member firm in Italy

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