Italy: 2023 budget law VAT measures

The 2023 budget law (Law no. 197 of 29 December 2022, published in official gazette no. 303 on 29 December 2022, and effective 1 January 2023) introduced the following value added tax (VAT) measures:

• Anti-VAT evasion checks prior to the allocation and operation of VAT numbers were reinforced.
  • To prevent the opening of new VAT numbers by persons that present risks, the taxpayer will be invited to appear before the tax office and to submit compulsory accounting records and any other documentary evidence of the actual pursuit of an economic activity and the absence of any risks. If the taxpayer fails to appear, or any irregularities or inadequacies are identified by the tax office, the taxpayer will not be entitled to a VAT number.
  • Non-compliant VAT numbers will be automatically closed, with simultaneous imposition of an administrative penalty of €3,000 on the natural person who is the owner or legal representative of the sole proprietorship or self-employment business.
  • Following the automatic closure of VAT numbers, the application for a new VAT number may be made only upon issuance of a three-year guarantee policy or bank guarantee, for an amount equal to any payments arising from past tax violations and, in any case, not less than €50,000. In all cases, enrolment in the VAT information exchange system (VIES) data base is precluded.
• The limit on cash payments was raised to €4,999.99 (from €1,999.99, and instead of the €999.99 limit that would have become effective under prior legislation).
• Taxable persons who facilitate, through the use of electronic interfaces such as marketplaces, platforms, portals or similar tools, distance sales of certain goods located in Italy, to be identified in a decree to be issued by the Ministry of Economy and Finance, will be required to report these transactions and details of the suppliers to the tax authority.
• Supplies of methane gas used in combustion for civil and industrial purposes and invoiced for estimated or actual consumption in January, February and March 2023 will be subject to 5% VAT instead of 10% or 22%. In the first quarter of 2023, the super-reduced VAT rate of 5% will also apply to supplies of thermal energy produced with methane gas under an “energy service” contract and to supplies of district heating services.
• Sales of pellets in 2023 will be subject to 10% VAT (instead of the standard rate of 22%).
• The VAT rate was reduced to 5% (from 10%) for early childhood food products (powdered or liquid milk and flour-based food preparations), child car seats and baby nappies, as well as for absorbent feminine hygiene products.

Read a January 2023 report [PDF 259 KB] prepared by the KPMG member firm in Italy