Italy turmoil may trigger VAT hike

Wed 30th May 2018

Italy’s current political turmoil, and potential fresh elections this summer, may trigger a VAT rise to 24.2% in 2019. The standard VAT rate could rise further to up to 25% by 2021.

Lack of government could trigger scheduled VAT hikes

The potential VAT rise was set in October 2017, and is automatically triggered if the country cannot meet its 2018 budget € currency membership targets. Italy has been without a government since March. Attempts by a coalition last week to form a new government failed, which will likely result in fresh elections over the summer. This means the October 2018 deadline for setting the 2019 budget could be missed. This would mean the scheduled VAT rises may go ahead automatically, as follows.

 

Standard rate Reduced rate
Today 22% 10%
2019 24.2% 11.5%
2020 24.9% 13%
2021 25% 13%



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