Italian VAT 1% October 2013 increase implementation rules
Following the increase in Italian VAT from 21% to 22% on 1 October, companies need to pay careful attention to charging the correct Italian VAT rates for goods and services provided over the transition.
Following the failed attempt to postpone the VAT rate increase to 1 January 2014, the standard VAT rate increased from 21% to 22% on 1 October 2013. The reduced rates of 10% and 4% are unchanged. The article below sets out the transitional rules for the introduction of the new standard rate.
Italian tax point for goods
The correct rate to use for the supply of goods is the rate prevailing on the first of the:
- The transfer of the goods through delivery
- Date of issuance of the invoice
- Payment of the amount due
Where goods are provided on a rolling basis, the VAT rate at the end of the calendar month should be used.
Italian tax point for services
For the provision of services, the tax point occurs on the earlier of:
- An invoice is issued
- The amount due is settled.
- Completion of the services
Correcting VAT increase errors
Where VAT register businesses issue VAT invoices at the wrong rate during the transition, they may issue corrective invoices and credit notes.