How vat / sales tax works in Italy
Italian VAT (IVA) defaults to 22% on goods and services, with businesses charging output tax, deducting input tax, and settling through monthly or quarterly liquidations and an annual dichiarazione.
A 10% rate covers restaurants, hotels, passenger transport, and building renovation, 5% covers children's products and feminine hygiene, and 4% covers basic food, books, qualifying first homes, and disability goods.
E-invoicing through the SDI system is mandatory for resident traders, with Esterometro-style cross-border reporting folded into standard filings and a consolidated VAT code arriving via 2026 legislation.
Tax rates at a glance
- Standard VAT
- 22%
- Reduced VAT
- 10%
- Reduced VAT children
- 5%
- Super-reduced VAT
- 4%
- Intra-EU B2B supplies
- 0%
- Forfettario threshold
- EUR 85,000
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
E-commerce sellersFreelancersExpatsFoundersHospitality operators
Watch out for
- Reduced bands follow Table A of the VAT code strictly: restaurant food at 10% but takeaway staples at 4%, hotel stays at 10% but luxury extras at 22%, so menu engineering needs line discipline.
- Forfettario traders invoice without VAT but cannot deduct input VAT, which makes the simplification costly for input-heavy startups that elect it for income-tax reasons.
- The 2026 consolidated VAT code restates rates and tables, so templates citing only the 1972 decree need updating even where the percentages look unchanged.
- Late liquidations and omitted SDI invoices draw some of Europe's steepest VAT penalties, with 90%-scale sanctions on understated tax in serious cases.
Frequently asked questions
What is the standard VAT rate in Italy?
The standard Italian VAT rate is 22% in 2026. Reduced rates of 10%, 5%, and 4% apply to defined hospitality, food, book, housing, and children's categories.
Is e-invoicing mandatory in Italy?
Yes for resident traders, who issue structured invoices through the SDI interchange system. Non-residents without an Italian establishment follow separate identification and filing tracks.
Do small Italian businesses charge VAT?
Not under the forfettario flat scheme below EUR 85,000, which invoices without VAT but blocks input recovery. Standard traders register and file from the first taxable supply.