VATLive > Blog > European News > Italy 2% VAT rise to 24% in 2016 proposal - Avalara

Italy 2% VAT rise to 24% in 2016 proposal

  • Jan 3, 2015 | Richard Asquith

Italy 2% VAT rise to 24% in 2016 proposal

The government has confirmed a potential 2% Italian VAT rise in 2016 if it fails to control the country’s finances. There may be further rises to up to 26.5% by 2018 if the country does not meet the Euro currency financial targets.

The proposal is contained within the Italian 2015 Budget, which has also gained approval from the European Commission as part of the Euro currency deficit reduction requirements. The budget sets a 2015 deficit target of 2.6% of GDP, just below the 3% maximum limit permitted by the Euro currency pact.

VAT increase proposal

If the government fails to hit this target, the 22% standard VAT rate would rise to 24% on 1 January 2016. There would also be a similar rise in the 10% reduced VAT rate to 12%.

The standard rate could rise again without further progress to 26% in 2017, and then to 26.5% in 2018.

The 2015 Budget also includes a reduction in the Italian e-book VAT rate from 22% to 4%, and an extension of the anti-VAT fraud reverse charge to the retail sector.

Italy raised its VAT rate from 21% to 22% in 2013.  There was also an Italian 1% rise to 21% in 2011 as part of deficit reduction plans during the financial crisis.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is the former VP Global Indirect Tax at Avalara