New VAT increase in Italy

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In order to reduce the public debt (GDP 2019 would only grow by 2.4%), the Italian Government has included in its Financial Law a VAT increase that should come into effect from January, 1 2020.

This increase would raise the ordinary VAT rate from 22% to 25.20% and reduced VAT from 10% to 13%.

A subsequent increase in 2021 will be for the ordinary VAT which will reach 26.50%.

However, the Italian Government also plans to introduce other measures that should avoid the VAT increase, notably through the revision of public expenditure, in order to apply the increase in VAT only to luxury goods, as well as the removal of the “tax bonus” of 80 € per month introduced by Mr Renzi for employees earning less than 25 000 € per year. The latter measure would reach approximately 12 billion euros, and this represents half of the necessary funds, which would cancel the increase in VAT.

The fight against the tax evasion which cost about 200 million € of, and this can assure the need and will help to delay the increase of the VAT, a subject that remains in the proceedings inside the Italian government.

It will be necessary to wait for the elections results of the European Parliament following which Italy could have more details on its political future.

The Italian ASD Group branches are at your disposal and will inform you of any new tax developments and new regulatory measures in force.

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