Italy avoids 24% VAT
- Oct 13, 2016 | Richard Asquith
Italy is presenting a draft 2017 budget which excludes a promised 2% VAT rise from 22% to 24%. In 2015, Italy committed to raising its VAT rate in 2017 if it failed to meet deficit reduction targets.
Instead, the government hopes to renegotiate the stringent terms of its Euro-currency membership and avoid further extensive austerity measures. The European Commission is pushing Italy to reduce its deficit below 2.4% of GDP. Originally, the plan was to hit 1.1%. The Commission is anxious that Italy reduces its debt mountain, which is now over 130% of GDP – one of the world’s largest.
Italy is to hold a key constitutional referendum in December, and will not want to put forward highly unpopular tax rises. There are no firm commitments given as to how Italy will meet the €15bn shortfall the VAT rise would have brought it.
Need a fiscal representative in Italy?
Non-EU businesses selling in Italy will need to appoint a fiscal representative alongside completing VAT registration and returns.
Fiscal representatives are responsible for the accurate VAT submissions of their non-EU clients.
Avalara offers a Fiscal Representative Service as part of its international VAT and GST Registration and Returns Service.
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Researching Italian VAT legislation is the first step to understanding your VAT compliance needs. Avalara has a range of solutions that can help your business depending on where and how you trade.